Former JPMorgan traders argue against finance professor testimony
As the start of the trial in the lawsuit accusing former JPMorgan traders Gregg Smith, Michael Nowak, Jeffrey Ruffo, and Christopher Jordan of spoofing inches closer, the parties are engulfed in preparing lists of witnesses.
As FX News Group has reported, the former JPMorgan traders have already opposed the testimony by Agent Jonathan Luca. Now, they seek to exclude the testimony by Prof. Kumar Venkataraman.
This becomes clear from a document filed by the defendants with the Illinois Northern District Court on August 16, 2021.
Gregg Smith, Michael Nowak, Jeffrey Ruffo, and Christopher Jordan submitted a joint motion, to exclude expert testimony by Prof. Kumar Venkataraman regarding his analysis of Messrs. Smith, Nowak, and Jordan’s trading activity, and his conclusion that their activity is inconsistent with an intent to execute and consistent with an intent to cancel.
The government has disclosed to the defense that it intends to call Prof. Venkataraman as an expert witness; that he will testify that he conducted an analysis of Smith, Nowak, and Jordan’s order activity; and that based on the size, type, and execution outcomes of their orders, their broader trading activity is consistent with the 489 trading episodes that the government will introduce in its case-in-chief, and, critically, inconsistent with an intent to execute.
The government has represented that Prof. Venkataraman’s analysis of Smith, Nowak, and Jordan’s “broader trading activity” consists of an analysis of their “limit order activity in the futures markets.” But, the defendants say, the government has not described the specific data or trading sequences on which he relied, beyond the 489 sequences that the government selected; nor has the government provided any written analysis that he performed.
Defense counsel requested this information, but the government merely pointed Defendants to the 489 sequences and the more than eight years of voluminous, market-wide CME order-entry and market-depth data.
On July 29, 2021, in light of certain assertions made in the government’s motion in limine to exclude evidence regarding its selection criteria for trading sequences, defense counsel asked the government to disclose the data, statistics, and other materials that served as the basis for Prof. Venkataraman’s analysis of purported patterns in Smith, Nowak, and Jordan’s trading activity, but to date the government has not responded.
Prof. Venkataraman was an expert witness in similar cases. For instance, he testified in the case against James Vorley. He then offered similar testimony regarding 61 trading episodes selected by the government, as well as testimony regarding the defendants’ broader trading activity, after the court denied the defendants’ motion to exclude his testimony.
The former JPM traders urge the Court not to follow that decision, “because Prof. Venkataraman’s proposed expert testimony is plainly unreliable and untested”.
Back in 2019, the DOJ launched criminal proceedings against the former JPMorgan precious metals futures traders. The indictment alleges that the defendants engaged in widespread spoofing, market manipulation and fraud while working at JPMorgan through the placement of orders they intended to cancel before execution in an effort to create liquidity and drive prices toward orders they wanted to execute on the opposite side of the market.