High-Speed Trader Found Guilty In Landmark Spoofing Case
Nov 04 2015
One of Coscia's lawyers "argued that high-frequency traders routinely canceled orders". Coscia made about a million and half dollars on the scheme in three months, according to the government.
The 53-year-old Coscia was accused of fraudulently earning money through the Chicago-based CME Group - the world's largest operator of futures exchanges - and European futures markets in 2011. Coscia, who took the stand in his own defense, denied wrongdoing.
"The defendant's trading activities disrupted the markets in his favor and against legitimate traders and investors", said Zachary Fardon, U.S. Attorney for the Northern District of Illinois.
He never supposed to execute "spoof" orders that moved the markets in the direction he wanted and were automatically canceled before they could be filled, prosecutors allege.
Coscia faces a maximum sentence of 25 years and a $25,000 fine on each of the six counts of commodities fraud and 10 years and a $1m fine on each of the six counts of spoofing.
He used these programs at his trading firm, Panther Energy Trading LLC, to commit a crime called spoofing, prosecutors said. It was banned under the Dodd Frank financial reforms.
The verdict came as futures traders and executives from around the world gathered in Chicago for an annual industry conference.
If Pilgrim's Progress, the nation's largest chicken producer, was frustrated in its efforts to buy corn futures because of Coscia's tactics, as the government alleges, "that's on them - they should have invested in algorithms" rather than use point-and-click trading, she said.