Nov. 8 was not a good day for Matthew Marshall Taylor. The U.S. Commodity Futures Trading Commission filed civil charges in New York federal court alleging the former Goldman Sachs commodities trader not only fabricated trades in 2007, which led to huge losses, but hid the information from his employer.

According to regulators, Taylor failed to disclose an $8.3 billion position on a futures contract, which ultimately cost his company $118 million in December 2007. He prevented the firm from discovering the position by bypassing Goldman Sachs’ internal system for routing trades to the Chicago Mercantile Exchange, and instead he manually entered falsified futures trades into a different internal system.

“Matt Taylor provided false explanations when confronted about irregularities we detected in his account during the Dec. 14, 2007, trading day,” said Goldman Sachs spokesman Michael DuVally. “He admitted his misconduct following the market close and was promptly removed from his job and terminated soon thereafter.

“Taylor’s scheme culminated in his concealment of a notional value of an approximately $8.3 billion long e-mini futures position.”

DuVally added the events had no impact on customer funds, and the firm has since enhanced its controls to prevent a re-occurrence of such an event.
Taylor’s attorney Ross Intelisano denied the allegations on behalf of his client.

“Matt never intentionally entered ‘fabricated trades’ to conceal any trading activity and Goldman never alleged he did so at the time of his termination or thereafter,” Intelisano said in a statement. “Matt, himself, brought the trading losses to the attention of senior managers at Goldman on the day they occurred.”

The lawsuit seeks penalties of $130,000 or triple Taylor’s monetary gain for each violation, whichever is higher.