First Guilty Verdict For Dodd-Frank "Spoofing" Violations

On November 2, 2015, Law360.com reported that Michael Coscia became the first individual to be convicted for the crime of "spoofing" under the Dodd-Frank Act of 2010. The Dodd-Frank Act amended section 4c(a)(5) of the Commodities Exchange Act, making it unlawful to engage in any trading or practice 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)." The Commodity Future Trading Commission (CFTC) published an Interpretive Guidance and Policy Statement that explains spoofing in terms of the intent behind the submission and cancellation of the bids. Improper reasons include: overloading the quotation system, delaying another's trade execution, creating the appearance of false market depth or creating artificial price movements.