Anti-Spoofing Law Survives as U.S. Supreme Court Rejects TraderBy
The U.S. Supreme Court turned away an appeal from the first commodities trader convicted of spoofing since Congress made it a crime, rejecting arguments that the 2010 ban is so vague it should be overturned.
The justices, without comment Monday, left intact a three-year prison sentence imposed on Michael Coscia, the former principal of Panther Energy Trading.
Spoofing typically involves systematically placing orders without intending to execute them to trick the market into thinking there’s interest in buying or selling. Congress outlawed spoofing in the commodity futures markets as part of the 2010 Dodd-Frank Act.
Coscia’s appeal called the law’s definition of spoofing "hopelessly vague." There is "nothing in the statute to tell market participants what line separates commonplace trading activity from the newly minted federal felony of ‘spoofing,’" Coscia’s lawyers argued.
Prosecutors said Coscia conducted thousands of spoofing-related trades, earning $1.4 million. At trial, prosecutors focused on transactions in the gold, euro, soybean meal, soybean oil, British pound, and copper futures markets.
A Chicago-based federal appeals court upheld the 2015 conviction, saying the law defined spoofing to make clear what types of trading practices were being prohibited. Among other things, the law requires an intent to cancel the order at the time it was placed, the three-judge panel said.
"Congress provided the necessary definition and, in doing so, put the trading community on notice," the appeals court said.
The Trump administration urged the court not to hear Coscia’s appeal.
The case is Coscia v. United States, 17-1099.