Law.com Subscribers SAVE 30%
Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.
When Is a Bid or Offer a 'Spoof'?
In 2010, Congress expressly criminalized a type of trading activity on the commodity futures exchanges referred to as “spoofing.” This new anti-spoofing statute greatly increased a prosecutor's power to crack down on traders who place and cancel orders at extremely high speeds through the use of powerful computer programs, supposedly in order to manipulate commodity futures prices and harm innocent investors. However, following the government's first criminal conviction for spoofing in United States v. Coscia, questions remain about what makes a commodity futures trader's conduct illegal instead of a legitimate trading strategy. Nonetheless, the Department of Justice (DOJ) and Commodity Futures Trading Commission (CFTC) recently have brought a substantial number of new cases against traders for violations of the anti-spoofing statute.
This article analyzes the confusion faced by commodity futures traders in assessing whether their trading strategies constitute illegal spoofing, which could land them in jail for up to 10 years, and examines whether the CFTC and Seventh Circuit have provided sufficient guidance on the distinction between spoofing and legitimate trading activity. It also explains why the Supreme Court's recent decision to not grant Coscia's petition for writ of certiorari, in which he argued that the anti-spoofing statute is unconstitutionally vague, will have significant consequences for the many spoofing actions currently pending before the courts, as well as for commodity futures trading in general.
The Anti-Spoofing Statute in Dodd-Frank
On July 21, 2010, President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank), Pub. L. No. 111-203, 124 Stat. 1376 (Jul. 21, 2010), which amended the Commodity Exchange Act and, for the first time, introduced a specific prohibition on a trading practice referred to as “spoofing.” See, D. Deniz Aktas, “Spoofing,” 33 Rev. Banking & Fin. L. 89, 89 (Fall 2013). This anti-spoofing statute states: “It shall be unlawful for any person to engage in any trading practice, or conduct … [that] is, is of the character of, or is commonly known to the trade as, 'spoofing' (bidding or offering with the intent to cancel the bid or offer before execution).” 7 U.S.C. §6c(a)(5)(C).
This premium content is locked for Entertainment Law & Finance subscribers only
ENJOY UNLIMITED ACCESS TO THE SINGLE SOURCE OF OBJECTIVE LEGAL ANALYSIS, PRACTICAL INSIGHTS, AND NEWS IN ENTERTAINMENT LAW.
- Stay current on the latest information, rulings, regulations, and trends
- Includes practical, must-have information on copyrights, royalties, AI, and more
- Tap into expert guidance from top entertainment lawyers and experts
Already a have an account? Sign In Now Log In Now
For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473
New York's Latest Cybersecurity Commitment
On Aug. 9, 2023, Gov. Kathy Hochul introduced New York's inaugural comprehensive cybersecurity strategy. In sum, the plan aims to update government networks, bolster county-level digital defenses, and regulate critical infrastructure.
The DOJ's Corporate Enforcement Policy: One Year Later
The DOJ's Criminal Division issued three declinations since the issuance of the revised CEP a year ago. Review of these cases gives insight into DOJ's implementation of the new policy in practice.
How AI Has Affected PR
When we consider how the use of AI affects legal PR and communications, we have to look at it as an industrywide global phenomenon. A recent online conference provided an overview of the latest AI trends in public relations, and specifically, the impact of AI on communications. Here are some of the key points and takeaways from several of the speakers, who provided current best practices, tips, concerns and case studies.
Use of Deferred Prosecution Agreements In White Collar Investigations
This article discusses the practical and policy reasons for the use of DPAs and NPAs in white-collar criminal investigations, and considers the NDAA's new reporting provision and its relationship with other efforts to enhance transparency in DOJ decision-making.