First U.S. Trader Prosecuted for ‘Spoofing’ Sees Conviction Upheld

Discussion in 'Wall St. News' started by ajacobson, Aug 7, 2017.

  1. ajacobson

    ajacobson

  2. cvds16

    cvds16

    I don't have subscription to the WSJ ... copy paste ?
     
  3. themickey

    themickey

  4. algofy

    algofy

    What are you in for.....I layered the crude futs to appear to be interested in buying so I could sell.
     
    VPhantom, bpr and beerntrading like this.
  5. DaveV

    DaveV

  6. Overnight

    Overnight

  7. ajacobson

    ajacobson

    Appeals court’s ruling buttresses Dodd-Frank provision that criminalized the tactic


    [​IMG]
    Michael Coscia in a Chicago courthouse in 2015. PHOTO: NANCY STONE/TNS/ZUMA PRESS
    By
    Dave Michaels
    Aug. 7, 2017 6:55 p.m. ET
    0 COMMENTS


    A federal appeals court on Monday upheld the conviction of the first U.S. trader to face prison time for manipulating futures prices by using a tactic known as “spoofing,” a strategy Congress made illegal in 2010.

    The decision by the U.S. Court of Appeals for the Seventh Circuit in Chicago also buttressed the seven-year-old provision in the Dodd-Frank Act that criminalized spoofing. The court rejected Michael Coscia’s claim that his conviction should be overturned because the law is too vague to be enforced. The three-judge panel found that Mr. Coscia “engaged in 10 weeks of trading” during which his conduct clearly crossed the line drawn by Dodd-Frank.

    “Mr. Coscia engaged in this behavior in order to inflate or deflate the price of certain commodities,” the circuit judges wrote. “His trading accordingly also constituted commodities fraud.”


    Attorneys for Mr. Coscia didn’t immediately respond to requests for comment.

    Spoofing involves placing large orders intended to deceive other traders into thinking supply or demand has changed. The activity moves the price in a direction that benefits smaller orders made by the trader that he wants filled at better prices. The big orders are then canceled before they can be executed.

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    Mr. Coscia, formerly head of futures trading firm Panther Energy Trading LLC, was sentenced in July 2016 to three years in prison for spoofing. The appeals court’s decision on Monday constituted an across-the-board win for the government. The court said Mr. Coscia’s conviction was supported by sufficient evidence and upheld the government’s approach to calculating how the trading strategy hurt other parties.

    Regulators such as the Commodity Futures Trading Commission have launched their own crackdowns on spoofing. The CFTC said Monday that Japan’s largest bank agreed to pay $600,000 to settle civil charges that one of its traders repeatedly disrupted trading in futures markets for more than five years. Bank of Tokyo-Mitsubishi UFJ didn’t admit wrongdoing as part of the settlement, which credited the bank for reporting the violation and cooperating with investigators.

    Write to Dave Michaels at dave.michaels@wsj.com
     
  8. Cuddles

    Cuddles

    I feel dumb for not realizing this was a strategy (just read about it being done on crypto). It's so simple too (if you got the bankroll).
     
  9. DeltaRisk

    DeltaRisk

    DOJ will never actually prosecute the banks that do it. Little traders get bent over, but the culprits get away with it.
    Quid pro quo.