Seventh Circuit Upholds First Criminal Conviction For Spoofing

A three-judge panel of the U.S. Court of Appeals for the Seventh Circuit unanimously upheld the criminal conviction of a high-frequency trader, Michael Coscia, for engaging in spoofing and commodities fraud in the futures markets. The spoofing and fraud resulted in earnings of $1.4 million in 2011.

Mr. Coscia was the first person criminally charged under the anti spoofing provision of the Dodd-Frank Act. He was sentenced to a three-year prison term for his trading misconduct. In upholding the conviction of Mr. Coscia, the Court of Appeals rejected arguments that the anti-spoofing law was unconstitutionally vague and, therefore, did not give him adequate notice of what conduct was prohibited, and that both his spoofing and commodities fraud convictions were not supported by the evidence.