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UPDATE 3-High-frequency merchant convicted in initial US spoofing case


(Adds criticism from invulnerability lawyer)

By Tom Polansek

CHICAGO Nov 3 (Reuters) – A jury on Tuesday convicted
high-frequency merchant Michael Coscia of line rascal and
“spoofing”, in a U.S. government’s initial rapist prosecution
of a criminialized trade practice.

The outcome might vitalise prosecutors to pursue market
manipulation cases and coax some high-speed traders to review
their strategies, in that orders are infrequently executed or
canceled within milliseconds after they are entered.

“This is a clarity that people have been looking for -
what accurately is spoofing, what defines it,” pronounced Trace Schmeltz,
an profession specializing in white-collar crime during law firm
Barnes Thornburg who was not concerned in a case.

Coscia, owners of New Jersey-based Panther Energy Trading,
was indicted of entering vast orders into futures markets in
2011 that he never dictated to execute. His goal, prosecutors
said, was to captivate other traders to markets by formulating an
illusion of direct so that he could make income on smaller
trades, a use famous as spoofing.

Steven Peikin, a counsel for Coscia, pronounced he was disappointed
by a verdict.

“We trust this box presents many novel and complex
issues, and Mr. Coscia intends to pursue all of his legal
options,” Peikin said. 

Coscia took a mount in his possess invulnerability to repudiate wrongdoing.
He testified that he dictated to trade each sequence that he
entered.

Prosecutors pronounced he illegally warranted $1.4 million in fewer
than 3 months in 2011 by spoofing.

“The defendant’s trade activities disrupted a markets in
his preference and opposite legitimate traders and investors,” said
Zachary Fardon, U.S. Attorney for a Northern District of
Illinois.

The conference spanned 7 days, though a jury in Chicago
convicted Coscia on 6 depends of line rascal and six
counts of spoofing, all of a charges he had faced, after
deliberating for only about an hour.

Each count of line rascal carries a limit sentence
of 25 years in jail and a $250,000 fine. Each count of
spoofing carries a limit judgment of 10 years in jail and a
$1 million fine.

A sentencing conference was set for subsequent year.

The outcome came as futures traders and executives from
around a universe collected in Chicago for an annual industry
conference.

“Investors are improved off when spoofers who chase on
high-frequency traders are brought to justice,” pronounced Bill Harts,
chief of a Modern Markets Initiative, a organisation representing
high-frequency and algorithmic traders.

Coscia’s organisation had fewer than 10 employees. However, he
“entered some-more vast orders than anyone else in a world” in
nearly a dozen CME Group Inc markets trimming from corn
and soybeans to bullion after he began regulating dual algorithmic
trading programs in Aug 2011, prosecutors pronounced during the
trial.

Coscia also traded in markets run by Intercontinental
Exchange

CME and ICE declined to criticism on a verdict.

Coscia’s charge was a initial underneath an anti-spoofing
provision that was combined to a Commodity Exchange Act by the
2010 Dodd-Frank financial reform.

In April, a U.S. Justice Department and a U.S. Commodity
Futures Trading Commission brought rapist and polite spoofing
charges opposite Navinder Sarao, a London-based merchant indicted of
market strategy that contributed to a May 2010 “flash
crash.” Sarao has denied a allegations.

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

(Reporting by Tom Polansek; Editing by Cynthia Osterman,
Bernard Orr and Ken Wills)

Article source: http://in.reuters.com/article/2015/11/04/court-spoofing-verdict-idINL1N12Y3OI20151104

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