Mark Lennihan/Associated PressThe headquarters of Goldman Sachs in Manhattan.

A former Goldman Sachs trader suspected of fabricating huge positions at the bank surrendered to the F.B.I. on Wednesday morning, escalating a case that until now has produced only civil charges.

Matthew Taylor, whose trading caused unexpected losses for Goldman, is expected to plead guilty to fraud, according to a person briefed on the matter. Mr. Taylor, who more recently worked for Morgan Stanley, will likely admit to entering fabricated trades that concealed an $8.3 billion position.

His lawyer, Ross B. Intelisano of Rich, Intelisano Katz, could not be reached immediately for comment on Wednesday. Previously, he has said that Mr. Taylor denies all the charges.

The surrender comes as a surprise development in a case that seemed limited to regulatory actions. Last year, the Commodity Futures Trading Commission accused Mr. Taylor of defrauding Goldman. Mr. Taylor, the agency said, bypassed Goldman’s internal controls and manually entered his “fabricated” futures trades so they did not register on the radar screen of the CME Group, the giant exchange. The trading, which occurred in late 2007, prompted about $120 million in losses for Goldman.

The blowup also created a regulatory headache for the bank. The trading commission last year sanctioned Goldman for failing to supervise Mr. Taylor. In December, Goldman paid $1.5 million to settle the case.

At the time, Goldman noted that the trades had no impact on customer money. “Since these events, we have enhanced our controls,” the bank said, adding that “Taylor admitted his conduct following market close and was subsequently terminated.”

Despite the stain on his record, Mr. Taylor was hired by Morgan Stanley. He has since left the firm.

Article source: http://dealbook.nytimes.com/2013/04/03/former-goldman-trader-surrenders-to-f-b-i/?partner=rss&emc=rss