Energy Metro Desk Article Discusses Criminal Charge of Spoofing

In the latest issue of Energy Metro Desk, an article titled "Jail Time for Spoofing?" discusses the implications of the recent Department of Justice ("DOJ") criminal charges against Michael Coscia of Panther Energy Trading for spoofing.

According to the article, spoofing is believed to be "rampant in the gas and oil markets, such that human traders will now often bypass certain closing windows and weekly report release times for fear of being run over by high-speed firms." The article refers to a New York Times Dealb%k blog post by Wayne State University professor Peter Henning, who notes that the criminal charges against Coscia "raise spoofing to a new level" because the evidence of fraudulent intent comes from a computer program that uses rapid-fire orders and does not depend on humans for its execution. Therefore, finding that Coscia engaged in spoofing "may come down to a jury deciding whether one computer fooling another is a crime."

Furthermore, the article states that the criminal charges are significant, since spoofing "is not a very well defined term, given that a single order cancellation could be the basis to charge." The article refers to the Cadwalader Memorandum on the topic, titled "First Criminal Prosecution for Spoofing: High-Frequency Trading Firm Owner Indicted in Northern District of Illinois," which notes that the case is significant for a number of reasons, including the following: (i) it pushes the boundaries of criminal prosecution of conduct that the CFTC previously pursued and (ii) it uses the criminal code to charge the conduct that would result in more than double the maximum imprisonment term (25 years) compared to the criminal spoofing charge under the CEA (10 years).

Click here to view the article.The above link leads to an excerpt from the most recent issue of Energy Metro Desk, which is published biweekly by Scudder Publishing Group, an energy trade news publishing company based in the Washington, D.C. metropolitan area. Those interested in learning more about Energy Metro Desk may do so by linking to www.energymetro.com or e-mailing [email protected]. Reprinted with permission of the publisher, Scudder Publishing Group, LLC. Copyright 2014.

Related news: First Criminal Prosecution for Spoofing (with Cadwalader Memorandum) (October 7, 2014).