Australian trader accused of spoofing gets more time to provide his version of offense

Maria Nikolova

Illinois Northern District Court grants Jiongsheng “Jim” Zhao’s request to provide his version of the offense by April 16, 2019.

Shortly after pleading guilty to spoofing charges in a US criminal case, Australian trader Jiongsheng “Jim” Zhao got extra time to provide probation office with his version of the alleged offense.

On Wednesday, January 2, 2019, the Illinois Northern District Court granted the request by the defendant to give the parties in the case more time to provide probation with each party’s version of the offense. The government’s version of the offense must be submitted to the probation office by April 9, 2019, and the defendant’s version of the offense must be submitted to the probation office by April 16, 2019.

As per the charges, from at least 2012 through the present, Zhao was employed as a trader at Trading Firm A, which was a proprietary trading firm located in Sydney, Australia and elsewhere. As a trader at Trading Firm A, Zhao traded futures contracts, including the E-mini S&P 500 futures contract on the Chicago Mercantile Exchange (CME).

The US authorities allege that, as a part of Zhao’s spoofing conduct, beginning in approximately July 2012 and continuing through approximately March 2016, he devised, implemented, and executed a trading strategy involving E-Mini S&P futures contracts in which he entered large-volume orders he intended, at the time he placed the orders, to cancel before they could be filled by other traders and which were transmitted to the Globex electronic trading platform that operated on a CME Group server.

Also, under the charges, the Large Orders placed by Zhao were material misrepresentations that falsely and fraudulently represented to market participants that he wanted to trade the Large Orders when, in truth and in fact, he did not because, at the time he placed these orders, he intended to cancel them before they could be executed.

Zhao is alleged to have placed thousands of Large Orders for E-Mini S&P futures contracts in an effort to cause his Primary Orders to be filled at prices, quantities, and at times that they otherwise would not have. He placed Large Orders in order to make money and avoid losses for himself and Trading Firm A.

On January 29, 2018, Zhao was arrested by the Australian Federal Police and remanded into custody pending extradition. On November 19, 2018, after his extradition to the United States, Zhao made an initial appearance before Magistrate Judge Young B. Kim. Zhao was initially held in custody pending a detention hearing, but was released on conditions on November 26, 2018.

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