Court schedules surrender of former Deutsche Bank traders convicted of spoofing
About a month after the appeal of former Deutsche Bank traders Cedric Chanu and James Vorley was nixed, the Court has scheduled their surrender.
On August 16, 2022, Judge John J. Tharp, Jr. of the Illinois Northern District Court issued two orders. The orders note that the defendants’ convictions have been affirmed.
Today, the Court ordered that Cedric Chanu will surrender for service of sentence at the institution designated by the Bureau of Prisons before 2:00 p.m. on January 31, 2023.
The Court makes the following recommendation to the Bureau of Prisons with regard to its designation of the defendant to an institution: The defendant be designated to FCI Allenwood- Low, in Allenwood, Pennsylvania, for Institutional Hearing Program (IHP) purposes.
James Vorley will have to surrender for service of sentence at the institution designated by the Bureau of Prisons before 2:00 p.m. on November 9, 2022.
The Court makes the following recommendation to the Bureau of Prisons with regard to its designation of the defendant to an institution: The defendant be designated to FCI Allenwood- Low, in Allenwood, Pennsylvania, for Institutional Hearing Program (IHP) purposes.
Deutsche Bank employed Chanu and Vorley as precious metals traders. Vorley traded precious metals futures contracts from May 2007 through March 2015 while based in London. Chanu was similarly a precious metals futures contract trader from March 2008 through May 2011 in London and from May 2011 through December 2013 in Singapore.
Turning to the conduct underpinning the criminal case, Chanu and Vorley placed orders for precious metals futures contracts on one side of the market that, at the time the orders were placed, they intended to cancel prior to execution. The government alleged that Chanu and Vorley placed such orders with the intent “to create and communicate false and misleading information regarding supply or demand (i.e., orders they did not intend to execute) in order to deceive other traders” and entice them to react to the false and misleading increase in supply or demand.
At all times relevant to this case, CME rules prohibited such conduct. Specifically at issue was Chanu and Vorley’s manual “spoofing” conduct, which involved placing “fake bids and offers” to “trick other market participants.”
The traders communicated amongst themselves via electronic chat. These included Vorley saying “UBS and this spo[o]fing is annoying me … it[’]s illegal for a start” and Chanu applauding another trader for tricking the algorithm.
Defendants were charged with conspiracy to commit wire fraud affecting a financial institution under 18 U.S.C. § 1343; on appeal, however, they argued any trading conduct akin to “manual spoofing” was not criminal prior to the Dodd‐Frank Wall Street Reform and Consumer Protection Act.
Chanu and Vorley’s trial was held in September 2020.
The jury deliberated for four days and returned several deadlock notes before acquitting Chanu and Vorley on the conspiracy count. Vorley was convicted of three counts of wire fraud (Counts 2, 8, 10), and Chanu was found guilty of seven counts of wire fraud (Counts 3, 9, 11, 12, 14, 15, and 16).
The district court denied defendants’ motion for a judgment of acquittal and motion for a new trial. The district court sentenced Vorley and Chanu to one year and one day of imprisonment. Chanu and Vorley then appealed.
In July 2022, the Appeals Court denied the traders’ appeal.