Case 112-cv-08170-RJS Document 8 Filed 01/29/13 Page 1 of 8 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK -------------------------------------- X U.S. COMMODITY FUTURES TRADING COMMISSION, Plaintiff, vs. MATTHEW MARSHALL TAYLOR, Defendant. -------------------------------------- X Civil Action No. 12 CV 8170 (RJS) ANSWER OF DEFENDANT MATHEW MARSHALL TAYLOR Defendant Matthew Marshall Taylor ( Taylor ), by his attorneys Clayman & Rosenberg LLP, hereby states the following as his Answer and Affirmative Defenses to the Complaint of the U.S. Commodity Futures Trading Commission in the above-captioned case Summary of Defendant s Violations of the Commodity Exchange Act 1. Denies the allegations contained in Paragraph 1, except admits that in November 2007 and for part of December 2007, he was a Vice President and trader at a large Futures Commission Merchant ( FCM ). 2. Denies the allegations contained in Paragraph 2. 3. Denies the allegations contained in Paragraph 3. 4. Denies the allegations contained in Paragraph 4. 5. Denies the allegations contained in Paragraph 5, except admits that certain trades resulted in large losses after the liquidation of the position. 6. Denies the allegations contained in Paragraph 6. 7. Denies the allegations contained in Paragraph 7, except admits that Plaintiff has brought this action seeking injunctive relief, a civil monetary penalty, and other relief. 8. Denies the allegations contained in Paragraph 8.
Case 112-cv-08170-RJS Document 8 Filed 01/29/13 Page 2 of 8 Jurisdiction and Venue 9. Denies the allegations contained in Paragraph 9 in so far as it alleges conduct of Taylor, except admits jurisdiction. 10. Denies the allegations contained in Paragraph 10 in so far as it alleges conduct of Taylor, except admits venue. The Parties 11. Admits the allegations contained in Paragraph 11. 12. Denies the allegations in the first sentence of Paragraph 12, except admits that on November 9, 12, 19, and 20, 2007, and December 11, 13 and 14, 2007, he was employed at a registered FCM located in New York, New York. With respect to the second and third sentences of Paragraph 12, Taylor admits the allegations. Facts Establishing Defendant s Violations of the Commodity Exchange Act A. Background 13. Admits the allegations contained in Paragraph 13. 14. Admits the allegations contained in Paragraph 14. 15. Admits the allegations contained in Paragraph 15. 16. Denies knowledge or information sufficient to form a belief as to the truth or accuracy of the allegations contained in Paragraph 16. 17. Denies the allegations contained in the first sentence of Paragraph 17. With regard to the remainder of the allegations of Paragraph 17, denies knowledge or information sufficient to form a belief as to the truth or accuracy of the allegations. -2-
Case 112-cv-08170-RJS Document 8 Filed 01/29/13 Page 3 of 8 18. Denies the allegations contained in the first sentence of Paragraph 18. Denies the allegations of the second sentence of Paragraph 18, except admits that the FCM had various risk reports that it relied upon to determine and manage risk. 19. Denies that there were fabricated trades, but otherwise admits the allegations contained in Paragraph 19. B. Taylor s Scheme 20. Denies the allegations contained in the first sentence of Paragraph 20. Denies knowledge or information sufficient to form a belief as to truth or accuracy of the allegations contained in the second sentence of Paragraph 20, except admits that Plaintiff purports to define Exhibit 1 as described in this paragraph. 21. Denies the allegations contained in Paragraph 21. 22. Denies the allegations contained in Paragraph 22. 23. Denies the allegations contained in Paragraphs 23(a)-(c). C. November and December Fabricated Trades 24. Denies the allegations contained in Paragraph 24. 25. Denies the allegations contained in Paragraph 25. 26. Denies the allegations contained in Paragraph 26. 27. Denies the allegations contained in Paragraph 27. 28. Denies information or knowledge sufficient to form a belief as to the truth or accuracy of the allegations contained in Paragraph 28, except admits that on December 13, 2007, he conducted trades which resulted in a large long e-mini futures position on behalf of his employer. 29. Denies the allegations contained in Paragraph 29. -3-
Case 112-cv-08170-RJS Document 8 Filed 01/29/13 Page 4 of 8 30. Denies the allegations contained in Paragraph 30. 31. Denies information or knowledge sufficient to form a belief as to the truth or accuracy of the allegations contained in the Paragraph 31, except admits that on December 14, 2007, he conducted trades which resulted in a large long e-mini futures position on behalf of his employer. 32. Denies the allegations contained in Paragraph 32. 33. Denies the allegations contained in Paragraph 33. D. As the Scheme Unraveled, Taylor Provided False Statements, Information and Reports to His Employer. 34. Denies information or knowledge sufficient to form a belief as to the truth or accuracy of the allegations contained in the first sentence of Paragraph 34. Denies the allegations contained in the second and third sentences of Paragraph 34. 35. Denies knowledge or information sufficient to form a belief as to the truth or accuracy of the allegations contained in Paragraph 35. 36. Denies knowledge or information sufficient to form a belief as to whether he sent a report to another controller on December 14, 2007. 37. Denies the allegations contained in Paragraph 37. 38. Denies the allegations contained in Paragraph 38. 39. Denies the allegations contained in Paragraph 39. 40. Denies the allegations contained in Paragraph 40, except admits that he told controllers on December 13 and December 14, 2007 there were problems with the booking of trades in his accounts. 41. Denies knowledge or information sufficient to form a belief as to the truth or accuracy of the allegations contained in Paragraph 41. -4-
Case 112-cv-08170-RJS Document 8 Filed 01/29/13 Page 5 of 8 42. Denies knowledge or information sufficient to form a belief as to whether he made a report to his employer. 43. Denies the allegations contained in Paragraph 43, except admits the definition of delta risk. 44. Denies knowledge or information sufficient to form a belief as to the truth or accuracy of the first clause of Paragraph 44, and denies the second clause of Paragraph 44. E. Taylor s Fraud Caused Losses of Over $118 Million. 45. Denies the allegations contained in Paragraph 45. V. VIOLATIONS OF THE COMMODITY EXCHANGE ACT Fraud in the Sale of Futures Contracts 46. Taylor repeats and realleges his responses contained in Paragraphs 1 through 45 of this Answer, as if fully set forth herein. 47. Denies the allegations contained in Paragraph 47. 48. Denies the allegations contained in Paragraph 48. 49. Denies the allegations contained in Paragraph 49. FIRST AFFIRMATIVE DEFENSE The Complaint fails to state a claim against Taylor upon which relief can be granted. SECOND AFFIRMATIVE DEFENSE The Complaint fails to plead fraud with particularity as required by Rule 9(b) of the Federal Rules of Civil Procedure. -5-
Case 112-cv-08170-RJS Document 8 Filed 01/29/13 Page 6 of 8 THIRD AFFIRMATIVE DEFENSE Plaintiff s claim is barred, in whole or in part, by the applicable statute of limitations. FOURTH AFFIRMATIVE DEFENSE Plaintiff s claim is barred by the doctrine of waiver. Plaintiff has waived its right to sue. FIFTH AFFIRMATIVE DEFENSE Plaintiff s claim is barred by the doctrine of estoppel. SIXTH AFFIRMATIVE DEFENSE Plaintiff s claim is barred by the doctrine of laches. SEVENTH AFFIRMATIVE DEFENSE Taylor hereby gives notice that he will rely on such other and further defenses as may become apparent during the course of this action. WHEREFORE, defendant Matthew Marshall Taylor respectfully requests that the Court A. Dismiss the Complaint against Matthew Marshall Taylor with prejudice in its entirety; B. Award Matthew Marshall Taylor costs and attorneys fees as authorized by law; and C. Grant such other and further relief as the Court deems just and proper. -6-
Case 112-cv-08170-RJS Document 8 Filed 01/29/13 Page 7 of 8 JURY DEMAND Matthew Marshall Taylor hereby demands trial by jury on all claims so triable. Dated January 29, 2013 CLAYMAN & ROSENBERG LLP 305 MADISON AVENUE, SUITE 1301 NEW YORK, NY 10165 (212) 922-1080 By /s/ Thomas C. Rotko (TR9339) Charles E. Clayman (CC0346) Attorneys for Matthew Marshall Taylor -7-
Case 112-cv-08170-RJS Document 8 Filed 01/29/13 Page 8 of 8 CERTIFICATE OF SERVICE The undersigned attorney hereby certifies that on January 29, 2013 I caused a true and correct copy of the foregoing Answer of Defendant Matthew Marshall Taylor, dated January 29, 2013, to be filed electronically and served by mail on anyone unable to accept electronic filing. Notice of this filing will be sent by e-mail to all parties by operation of this Court s electronic filing system or by mail to anyone unable to accept electronic filing as indicated on the Notice of Electronic Filing. Parties may access this filing through the Court s CM/ECF System. /s/ Thomas C. Rotko -8-