Trader Found Guilty Of Commodity Fraud And 'Spoofing'
In the U.S. government's first criminal prosecution of the manipulative trading practice known as "spoofing," high-frequency trader Michael Coscia was found guilty on Tuesday. He was also found guilty of commodity fraud.
The practice of placing large orders to stimulate a market reaction, and then cancelling them while profiting off smaller orders is the manipulative trading practice called "spoofing." It was banned under the Dodd Frank financial reforms.
NPR's Sonari Glinton reports for the Newscast unit:
"Prosecutors say the goal was essentially to create the illusion that there was demand in a market. And then Coscia could make money off of small trades. ... Coscia made about a million and half dollars on the scheme in three months, according to the government.
"Coscia was convicted of six counts of commodities fraud and six counts of spoofing. He faces a maximum sentence of 210 years in jail and seven and a half million dollars in fines."
Bloomberg reports that one of Coscia's lawyers "argued that high-frequency traders routinely canceled orders. He told the jury that Coscia's trading strategy was unique but not illegal."
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