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UPDATE 1-High-frequency trader convicted in first U.S. spoofing case
November 3, 2015 / 11:22 PM / 2 years ago

UPDATE 1-High-frequency trader convicted in first U.S. spoofing case

(Adds details on verdict, lawyers decline to comment)

By Tom Polansek

CHICAGO, Nov 3 (Reuters) - A U.S. jury on Tuesday found high-frequency trader Michael Coscia guilty of commodities fraud and “spoofing” in the U.S. government’s first criminal prosecution of the banned trading practice.

Coscia, owner of New Jersey-based Panther Energy Trading, was accused of entering large orders into futures markets in 2011 that he never intended to execute. His goal, prosecutors said, was to lure other traders to markets by creating an illusion of demand so that he could make money on smaller trades, a practice known as “spoofing.”

Karen Seymour, a lawyer for Coscia, declined to comment after the verdict. Coscia, who took the stand in his own defense, denied wrongdoing.

Prosecutors also declined to comment immediately.

The jury convicted Coscia on six charges of commodities fraud and six charges of spoofing, all of the charges he had faced, after deliberating for less than two hours.

Coscia’s prosecution was the first under an anti-spoofing provision that was added to the Commodity Exchange Act by the 2010 Dodd-Frank financial reform.

In April, the U.S. Justice Department and the U.S. Commodity Futures Trading Commission brought criminal and civil spoofing charges against Navinder Sarao, a London-based trader accused of market manipulation that contributed to the May 2010 “flash crash.” Sarao has denied the allegations.

Coscia’s case is U.S. v. Coscia, 14-cr-00551, U.S. District Court, Northern District of Illinois.

Reporting by Tom Polansek; Editing by David Gregorio and Cynthia Osterman

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