Bloomberg reports that Daniel Gordon, Merrill Lynch's former chief energy trader, has pleaded guilty to money laundering and wire fraud and admitted he embezzled $43m from Merrill in 2000.
Gordon, 27, has also settled charges brought by US regulator the Securities and Exchange Commission that he helped Enron overstate revenues by $50m. The former trader now faces up to 55 years in prison, but prosecutors have apparently indicated that they will go easy on him if he cooperates fully with their continuing inquiries. Whatever he tells them, Gordon still looks likely to serve several years in prison. He has now surrendered his passport and has been released on $500,000 bail. Sentencing is set for 30th April.
The former trader apparently got the $43m away from Merrill by setting up a phoney energy trade in August 2000. The firm is said to have been unaware of the theft until October last year. Gordon said in a prepared statement last week: 'I deeply regret my actions that led to the filing of these charges. By pleading guilty I accept full responsibility for my misconduct and for the difficulties I have caused my family, my colleagues and my friends. I apologize to all those who have been hurt by my actions'.
The matter may not, however, end here for Merrill Lynch. Gordon also told the court that he falsified certain documents on the orders of his superiors when his firm was selling his energy trading unit to Allegheny Energy in 2001. He claims that there was an effort to inflate the value of his unit prior to the sale. Allegheny and Merrill are already locked in a court battle over the deal.
A spokesperson for Merrill said Friday: 'Mr Gordon admitted today that he has lied in the past and is a thief. This is the first we have heard of Mr Gordon's allegations regarding the sale of the energy business, so we can't comment on it other than to say he has stolen from our firm in the past and lied to people about it'. Merrill is cooperating with the US government's ongoing investigation.