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 In imposing a sentence well below the 33- to 41-month term the U.S.
Department of Justice had recommended, U.S. District Judge William
Pauley in New York castigated both Goldman and government
authorities for failing to immediately address Taylor's conduct when
it occurred.
The case is a "paradigm of everything that is wrong with Wall Street
and the regulators charged with protecting the public," Pauley said.
Prosecutors claimed Taylor lied to supervisors and fabricated trades
in December 2007 to conceal an $8.3 billion position in Standard &
Poor's 500 e-mini futures contracts, which bet on the direction of
that index. Goldman fired him shortly thereafter.
The bank had sought the $118 million to cover its losses on the
trade, a request the U.S. Department of Justice supported, though it
is unlikely that Goldman will collect.
Taylor, a married father of two, has moved to Florida, where he and
his wife have started a pool cleaning business.
"We've tried to rebuild our lives far from Wall Street," Taylor, who
turns 35 on January 1, told Pauley. He pleaded guilty in April, a
day after turning himself in to authorities.
He was previously fined $500,000 by the U.S. Commodity Futures
Trading Commission.
Goldman itself paid a $1.5 million civil fine last December to
settle CFTC charges that it failed to adequately supervise Taylor,
an amount that Pauley said it earned back in a "couple of minutes"
given its more than $7 billion in annual profits.
Pauley also faulted Goldman for simply firing Taylor without
disclosing the full extent of his cover-up.
"Astonishingly, Goldman then watched as one of its competitors,
Morgan Stanley, rehired Taylor," Pauley said.
But the judge saved some of his harshest words for the government,
criticizing regulators and prosecutors for failing to investigate
Taylor for years and then claiming credit in the media when they
finally did.
"It cannot be called justice or oversight when it took the
government six years to bring a rogue trader to justice, when the
trader admitted his conduct on Day 1," he said. "At some point, the
justice needs to be swift if it's going to mean anything, other than
another press release and the ability to say, 'another pelt.'"
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The office of Manhattan U.S. Attorney Preet Bharara and the CFTC
declined to comment on Pauley's remarks. But a person familiar with
the criminal investigation said prosecutors only first became aware
of Taylor's conduct last November after seeing a news report about
the CFTC probe.
In a statement, a Goldman spokesman said the bank had disclosed in a
filing with the Financial Industry Regulatory Authority that Taylor
was fired in 2007 for "inappropriately large proprietary futures
positions in a firm trading account".
Pauley said Taylor is a "brilliant and talented" man who made a
series of terrible decisions, and while he did not deserve years in
prison, the judge concluded that a short sentence of imprisonment
was necessary.
"Everything about this case is sad," Pauley said. "Your employer's
response was sad. Your conduct is sad. The government's conduct is
sad.
"Undoubtedly, they'll issue another press release," he added. As of
5 p.m., Bharara's office had not yet fulfilled that prediction.
The case is U.S. v. Taylor, U.S. District Court, Southern District
of New York, No. 13-cr-00251.
(Reporting
by Joseph Ax; editing by Kenneth Barry, Richard Chang and Ken Wills)
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