A federal judge in Manhattan on Friday sentenced Matthew Taylor, a former Goldman Sachs trader, to nine months in prison for covering up an $8.3 billion unauthorized trade at the firm.
In 2012, the Commodity Futures Trading Commission accused Mr. Taylor of hiding the trade to protect his year-end bonus of $1.5 million. Prosecutors said Mr. Taylor acted out of “greed and pride” and had sought a sentence of 33 to 41 months. Mr. Taylor’s trade cost Goldman $118 million, a figure he has been ordered to repay.
Mr. Taylor, who once earned seven figures on Wall Street, now cleans pools six days a week in Florida. Mr. Taylor, who was dressed in a dark suit and blue tie, apologized to the court, his wife, his two children and even Goldman for his conduct, adding that it was “painful beyond words” to be the source of distress to his loved ones.
Mr. Taylor, who graduated from the Massachusetts Institute of Technology, owned a home in the Hamptons by the time he was 28.
“In short, Mr. Taylor, you were, in the words of Tom Wolfe, ‘a master of the universe,’ ” the judge, William H. Pauley III, said.
The C.F.T.C. accused Mr. Taylor, who traded equity derivatives products in New York, of hiding the $8.3 billion position he had taken in electronic futures contracts tied to the Standard & Poor’s 500-stock index. Though his superiors had ordered him to reduce the risk on his trading book, he instead ratcheted up the position. To conceal the size of the position, he entered “multiple false entries” into a Goldman trading system, booking trades that he never actually made.
Goldman fired Mr. Taylor after learning about his cover-up and reported the unauthorized trades to authorities within days. The C.F.T.C. did not bring charges against Mr. Taylor until five years later, during which time he was able to get another job as a trader with Morgan Stanley.
Mr. Taylor left Morgan Stanley during the summer of 2012 and pleaded guilty to wire fraud earlier this year.
“This case presents a paradigm of everything that is wrong with Wall Street and the regulators that are charged with protecting the public,” the judge said. “So much for Goldman’s concern about the financial markets.”
Goldman said in a email statement that it notified the Financial Industry Regulatory Authority, the brokerage industry’s policing arm, about Mr. Taylor’s dismissal and made clear “that he was fired for misconduct related to ‘inappropriately large proprietary futures positions in a firm trading account.’”
In August, Mr. Taylor agreed to pay a $500,000 fine in a civil matter related to the criminal case. He had earlier been forced to to give up $3 million in deferred compensation when Goldman fired him.
Mr. Taylor is the second Wall Street trader to receive prison time in less than a month. In November, Kareem Serageldin, a former trader at Credit Suisse, was ordered to serve two and a half years for inflating the value of mortgage bonds as the housing market collapsed.
“Mr. Taylor accepts the judgment of the court,” Thomas C. Rotko, a lawyer for Mr. Taylor, told reporters outside of the courtroom. “We are pleased that the judge saw this matter as we did as an indictment in part of the regulatory system itself.”