Court stays CFTC proceedings against former Deutsche Bank traders
The Illinois Northern District Court has stayed the lawsuit brought by the Commodity Futures Trading Commission (CFTC) against former Deutsche Bank traders James Vorley and Cedric Chanu. The relevant order was signed by the Honorable Steven C. Seeger on January 11, 2022.
The lawsuit is stayed at the request of the regulator as it has informed the Court that each defendant has signed and submitted a proposed Consent Order to the Division of Enforcement. The CFTC’s Division of Enforcement is prepared to present the proposed Consent Orders for consideration by the Plaintiff Commodity Futures Trading Commission. Once approved by the Commission, the parties will present the proposed Consent Orders to the Court for its consideration and, if approved by the Court, the Consent Orders would resolve the matter in its entirety.
In order to conserve the resources of the Court and the parties, the parties jointly requested that the Court stay the litigation, to allow the Division additional time to present the proposed Consent Orders to the Commission for its review.
Let’s recall that the CFTC alleges in its Complaint that Vorley and Chanu engaged in a five-year manipulative and deceptive scheme to trick other traders in the precious metals futures market by spoofing. To effect the scheme, Vorley and Chanu allegedly placed large bids and offers with the intent to cancel those orders before execution, in order to induce other market participants to transact on smaller orders that Vorley and Chanu had placed on the opposite side of the market.
Vorley and Chanu are alleged to have tricked the market into believing that certain of their orders were genuine to benefit themselves. The Complaint alleges that, by virtue of this conduct, the traders engaged in acts and practices that violated the anti-spoofing provision in Section 4c(a)(5)(C) of the Commodity Exchange Act (“Act”), 7 U.S.C. § 6c(a)(5)(C) (2012), (Count I), and the prohibition on manipulative and deceptive devices in Section 6(c)(1) of the Act, 7 U.S.C. § 9(1) (2012), and Commission Regulation (“Regulation”) 180.1(a)(1) and (3), 17 C.F.R. § 180.1(a)(1), (3) (Count II).
As FNG has reported, Vorley and Chanu moved to dismiss portions of both Counts, arguing that the Complaint was filed after the applicable five-year limitations period as to all but approximately six months of alleged misconduct. The CFTC notes that the defendants do not dispute that certain alleged conduct falls within the limitations period and that the case will proceed as to that conduct.
The regulator says that the defendants’ arguments fail because both spoofing and manipulation are properly pleaded as the types of continuing schemes that prevent the running of the statute of limitations provided at least one instance occurred within the limitations period, so the entire Complaint is timely.
The regulator and the defendants had previously failed to reach a settlement.