Still no sentencing date for ex-Deutsche Bank traders convicted of spoofing
The criminal proceedings against former Deutsche Bank traders James Vorley and Cedric Chanu continue at the Illinois Northern District Court. The results of the telephone conference held on Thursday, however, are not very straightforward.
A brief entry by the Honorable John J. Tharp, Jr. states that the conference was continued to March 3, 2021. The Court deferred setting a sentencing date until the next status date.
In September 2020, Vorley and Chanu were convicted of three counts and seven counts, respectively, of wire fraud affecting a financial institution. The traders allegedly engaged in a scheme to defraud other traders on the Commodity Exchange Inc., which was run by the CME Group. The defendants defrauded other traders by placing fraudulent orders that they did not intend to execute in order to create the appearance of false supply and demand and to induce other traders to trade at prices, quantities, and times that they otherwise would not have traded.
The sentencing of the former traders convicted of spoofing has been rescheduled already at the request of the defendants. Back in November, they explained that request for rescheduling their sentencing was based on:
- the pending motions for judgments of acquittal and for a new trial;
- complications arising from the ongoing COVID-19 pandemic; and
- the prosecution’s recent disclosure of a 28-page declaration from its trial expert, Professor Kumar Venkataraman, which purportedly includes calculations of losses to over 300 unidentified market participants resulting from 5,900 unidentified alleged “spoofing sequences” between April 2008 and 2013.
As FX News Group has reported, Vorley and Chanu have made it clear earlier in January that they will stand by their push for acquittal. Their main argument is that the government’s opposition “fails to address most of the context of trading on an anonymous electronic exchange, which allows for all kinds of conduct that could be characterized as “deceptive.”
Vorley and Chanu stress that the trading was conducted on an anonymous exchange, where traders were permitted to trade on both sides of the market, and cancellations occurred all the time within milliseconds. The exchange also allowed traders to misrepresent actual supply and demand by using icebergs or to trade invisibly by placing immediate-or-cancel orders.
In this type of trading traders may have tried to guess at the subjective intent of other traders. However, the orders themselves did not communicate anything beyond an intention to trade at the prices and quantities specified if they were executed before they were cancelled.