Despite a Regulatory Black Mark, Trader Landed at Morgan Stanley

On Wall Street, a black mark on your regulatory files can be a significant employment hurdle, making it difficult to work at a major bank again.

That wasn't the case with Matthew Marshall Taylor.

In December 2007, Goldman Sachs parted ways with Mr. Taylor, a trader. The bank then reported his departure to the Financial Industry Regulatory Authority, a Wall Street regulator.

In that filing, Goldman said that Mr. Taylor was let go for “alleged conduct related to inappropriately large proprietary futures positions in a firm trading account.” The filing would have been accessible to any firm looking to hire Mr. Taylor.

Despite the stain on his record, Mr. Taylor, a few months later, landed at Goldman rival Morgan Stanley, where he had previously worked. Mr. Taylor left Morgan Stanley in August, according to regulatory filings.

Now, the situation looks even more curious.

On Thursday, the U.S. Commodity Futures Trading Commission filed a n enforcement action against Mr. Taylor, accusing him of concealing a $8.3 billion trading position at Goldman that resulted in $119 million of losses. The agency alleges that Mr. Taylor entered fabricated trades and then “obstructed his employer's discovery of his scheme by, among other things, providing false, misleading or deceptive information and reports.”

A Goldman spokesman said Mr. Taylor initially provided false explanations for his trading and then admitted the conduct. The spokesman said Mr. Taylor “promptly removed from his job and terminated soon thereafter. Since these events, which had no impact on customer funds, we have further enhanced our controls.”

Ross B. Intelisano, Mr. Taylor's lawyer, said his client is disappointed in the trading commissions decision to file a complaint. “He strenuously denies all of the allegations,” said Mr. Intelisano. “Matt never intentionally entered ‘fabricated trades' to conceal any trading activit y and Goldman never alleged he did so at the time of his termination or thereafter. Matt, himself, brought the trading losses to the attention of senior managers at Goldman on the day they occurred.”

Morgan Stanley declined to comment.