Goldman Sachs fined $1.5 million for trading glitch

WASHINGTON Sat Dec 8, 2012 2:21am IST

A trader works at the Goldman Sachs stall on the floor of the New York Stock Exchange, April 16, 2012. REUTERS/Brendan McDermid

A trader works at the Goldman Sachs stall on the floor of the New York Stock Exchange, April 16, 2012.

Credit: Reuters/Brendan McDermid

Related Topics

Stocks

   

WASHINGTON (Reuters) - Goldman Sachs Group Inc (GS.N) was fined $1.5 million to settle charges it failed to supervise its traders and allowing one futures dealer to hide billions in dollars from sight and causing a $118 million loss.

Ex-Goldman trader Matthew Marshall Taylor in 2007 camouflaged an $8.3 billion position, manually entering fake trades, the Commodity Futures Trading Commission (CFTC) said on Friday.

"Goldman failed to have policies or procedures reasonably designed to detect and prevent the manual entry of fabricated futures trades into its front office systems," the top U.S. derivatives regulator said.

"As a result, on seven trading days in November and December 2007, Taylor circumvented Goldman's risk management, compliance, and supervision systems," the CFTC said.

In a lawsuit in New York in November, the CFTC sought a $130,000 civil penalty against Taylor, who at the time was a vice president at the bank's Capital Structure Franchise Trading desk, and later went to work for Morgan Stanley (MS.N).

Goldman Sachs took a $118 million loss in unwinding the position in e-mini S&P 500 futures contracts.

"Taylor's activity was flagged by our controls on December 14, with no impact to customer funds," Goldman Sachs said in an emailed statement. "Since these events, we have enhanced our controls. We're pleased to have settled this matter."

Taylor had established the position on December 13, 2007.

Bart Chilton, a Democrat and one the CFTC's commissioners, thought the penalty was too low.

"I believe that the monetary penalty should be significantly higher in order to represent a sufficient punishment, as well as to denote a meaningful deterrent to future illegal activity," Chilton said in a statement. (Reporting by Douwe Miedema, Additional reporting by Lauren Tara LaCapra; Editing by Gerald E. McCormick and Andre Grenon)

FILED UNDER:

REUTERS SHOWCASE

2015: India Outlook

2015: India Outlook

India in 2014: A dream run for markets  Full Article 

Funding Woes

Funding Woes

Co-founder of SpiceJet seeks time to finalise rescue  Full Article 

Regulating Airfares

Regulating Airfares

India considers temporary cap on airfares - government official  Full Article 

Flying Back on Course

Flying Back on Course

The inside story of the new Airbus A350 jet  Full Article 

Tracking Gold

Tracking Gold

Gold inches higher on weaker dollar, Asian buying  Full Article 

Cyber Attacks

Cyber Attacks

China condemns cyberattacks, but says no proof N.Korea hacked Sony  Full Article 

Connecting Markets

Connecting Markets

China stock connect scheme scorecard throws up surprises  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage