Morgan Stanley Hopes Its Clawback People Are Better Than Its Background-Check People

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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]

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Guy Who Was Fired By Goldman Sachs For Amassing "Inappropriately Large" Position Welcomed With Open Arms At Morgan Stanley

Back in December 2007, things weren't going so well for Matthew Marshall Taylor. He'd just been fired from Goldman Sachs and not only was he out of a job, but his prospects for finding a new one didn't look so hot, on account of the fact that Goldman planned to put a note in his file detailing the reason he'd been let go-- "for building an 'inappropriately large' proprietary trading position"-- and it seemed unlikely anyone at the firm would be open to serving as a reference for him moving forward.  Three months later, however, one bank told MMT that there was room for him at their inn. Morgan Stanley, apparently having decided the incident at Goldman was but an asterisk in what would be a long and fruitful career, told Taylor to come on down, employing him for over four years until he left in July of his own accord and not because of any legal issues relating to his work at Goldman Sachs. Taylor was accused yesterday by the U.S. Commodity Futures Trading Commission of concealing an $8.3 billion position in 2007 that caused Goldman Sachs to lose $118 million. Goldman Sachs fired Taylor in December 2007 and cited “alleged conduct related to inappropriately large proprietary futures positions in a firm trading account,” in a so-called U-5 form, according to a Financial Industry Regulatory Authority document. Morgan Stanley, which had employed Taylor before he joined Goldman in 2005, re-hired him in March 2008, according to the records. Taylor, who handled client-related equity derivative trading at Morgan Stanley, left the firm in July, according to Mark Lake, a company spokesman in New York. His departure wasn’t related to the CFTC complaint filed against Taylor yesterday in federal court, according to a person familiar with the situation, who requested anonymity because the information is private. Taylor concealed the position by bypassing the firm’s internal system for routing trades to the Chicago Mercantile Exchange and manually entering fabricated futures trades in a different internal system, according to the complaint. Goldman Sachs, which wasn’t identified in the CFTC lawsuit, said Taylor allegedly made the trades while employed at the firm. Anyway, since MMT is a free agent at the moment, if any other banks would like to overlook the blip, please do get in touch directly. Citi, BofA? At least just think about it. He was good enough for Morgan Stanley, he should be good enough for you. Morgan Stanley Hired Goldman Trader Accused Of Hiding Position [Bloomberg] CFTC Charges Matthew Marshall Taylor with Fraud for Fabricating and Concealing Trades from His Employer and Obstructing Their Discovery [CFTC]

In Wake Of Exec "Accidentally" Stabbing A Cab Driver, Morgan Stanley Insists You Ask, "What Would The Post Say?"

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