Streetwise Professor

December 15, 2014

Is This Prosecution a Spoof of a Real Manipulation Case?

Filed under: Derivatives,Economics,Regulation — The Professor @ 10:05 pm

Michael Coscia, the defendant in the maiden criminal manipulation “spoofing” prosecution, is calling for dismissal of the case on the grounds that the relevant Frankendodd language is “hopelessly vague.”  This is the obvious argument for him to make. The defendants in the BP propane criminal case walked because Judge Miller decided that the anti-manipulation language of the Commodity Exchange Act was “unconstitutionally vague” as applied to the facts of the case. In some respects, the blame for this goes back to the horrible CFTC decision in the case in re Indiana Farm Bureau. In any event, spoofing does indeed sound like a pretty damn vague allegation. Given that, it will be quite interesting to see whether the DOJ fares better in a Chicago courtroom than it did here in Houston in 2009.

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1 Comment »

  1. don’t pay for FT, so can’t read the article. Spoofing in trading parlance depends. We used to have a pit trading rule that allowed pits to enforce spoofing. Bids or offers that were meant to confuse the market. Traders rarely were fined, but do it too much and you would be shunned.

    Can’t do it in electrical platforms so HFT traders have developed all kinds of orders to try and manipulate the market. Friend of mine that used to bid and offer on 1000 lots, and take them was accused by CME and fined for “spooking” the market. I was surprised, since he’d take any number someone threw at him.

    Comment by pointsnfigures — December 17, 2014 @ 10:16 am

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