One might think that being terminated by Goldman Sachs for taking “inappropriately large proprietary futures positions in a firm trading account” and “violating investment-related statutes, regulations, rules or industry standards of conduct” might make it hard to get another job on Wall Street.
Not at all. It might make it hard, however, to get your deferred compensation after you plead guilty to fraud, re: said inappropriately large futures position.
Goldman had fired the trader, Matthew Taylor, in December 2007 for hiding an $8.3 billion futures bet from his former bosses. Morgan Stanley, which hired him only a few months later, now aims to withhold $100,000 to $200,000 in deferred compensation on grounds he misrepresented the circumstances of his exit from Goldman, the people said….
Thomas Rotko, Mr. Taylor’s lawyer, said that “Morgan Stanley decided, based upon their own investigation and their prior knowledge of Matt Taylor, to rehire him—fully cognizant that Goldman reported that he was discharged due to conduct related to inappropriately large futures positions in a firm trading account.”
It is unclear whether that extensive bush-beating included a look at the form Goldman filed with FINRA about Taylor’s dismissal.
In Mr. Taylor’s complete U-5 form, made available by Finra to member firms to help inform their hiring decisions, Goldman checked “yes” to a question on whether the former trader had been discharged amid allegations of “violating investment-related statutes, regulations, rules or industry standards of conduct,” according to a person familiar with the document. But when asked if Mr. Taylor had faced allegations of “fraud or the wrongful taking of property,” Goldman marked “no,” the person said.
“Morgan Stanley must have been either very interested in hiring this guy or very fooled by the disclosure,” said Jeffrey Liddle, founding partner of Liddle & Robinson LLP, which has represented Wall Street officials in employment disputes. “In our own experience, they usually err in the conservative direction on this kind of thing.”
Blind Spot Covered Ex-Trader’s Trail [WSJ]