Goldman Sachs lost $118M on e-mini futures — Matthew Taylor's hidden trade

Matthew Taylor was a 28-year-old trader at Goldman Sachs, an MIT graduate who traded S&P 500 e-mini futures — electronically traded contracts that track the S&P 500 index. In 2007, Taylor began making unauthorized trades that quickly went wrong, accumulating losses of approximately $118 million.

Rather than reporting the losses, Taylor attempted to hide them by entering fake offsetting trades into Goldman Sachs' trading system. He created false trade records that made it appear his positions were hedged, when in reality the losses were mounting. The deception continued until Goldman Sachs' risk control systems detected the anomalies.

Goldman Sachs fired Taylor immediately and reported the incident to regulators. However, the US Commodity Futures Trading Commission (CFTC) did not file charges until five years later, in 2012. Taylor was arrested and charged with commodities fraud for concealing the unauthorized trades.

In December 2013, Taylor was sentenced to 9 months in prison and ordered to repay the full $118 million. He also agreed to pay a $500,000 civil penalty and forfeited $3 million in deferred compensation from Goldman Sachs. The case was notable for the long gap between the crime and the prosecution.