Australian trader accused of “spoofing” remains unavailable for prosecution in US
The Department of Justice admits Zhao has not yet been arrested in the United States and, hence, no indictment against him has been filed.
Jiongsheng Zhao, an Australian trader accused of spoofing and engaging in a manipulative and deceptive scheme, remains unavailable for prosecution in the United States, the Department of Justice has admitted. In a document filed with the Illinois Northern District Court late last week, the US authorities say that Zhao has not actually been arrested and that, hence, the DOJ needs more time to file the indictment.
Zhao, who is currently facing extradition proceeding in the Commonwealth of Australia, is unlikely to become available for prosecution in the United States within 60 days, the US authorities concede.
In March this year, Judge Sara L Ellis of the Illinois Northern District Court granted a Motion by the Commodity Futures Trading Commission (CFTC) to stay the civil proceedings against Jiongsheng Zhao, as the regulator admitted it needed more time to obtain service on the ex-trader.
In January this year, the United States Department of Justice charged Jiongsheng (“Jim”) Zhao, 30, of Australia, in a criminal complaint with wire fraud, commodities fraud, making false statements to the CME, and spoofing offenses when he was a trader at a proprietary trading firm located in Sydney, Australia. According to the complaint, data analysis identified hundreds of instances of spoofing by Zhao on the CME between approximately July 2012 and March 2016. Additionally, the complaint alleges that Zhao made false written statements to the CME after being confronted with allegations of his disruptive trading practices.
In its Complaint, the CFTC alleges that from at least July 2012 through at least March 2017, Zhao repeatedly engaged in manipulative or deceptive acts in the E-mini S&P 500 futures contract market on the Chicago Mercantile Exchange (CME). Zhao is alleged to have employed “spoofing” (bidding or offering with the intent to cancel the bid or offer before execution). He placed an order that he wanted to execute and thereafter entered a larger order on the opposite side of the market that he intended to cancel before execution. In placing these larger spoof orders, Zhao intentionally or recklessly sent false signals of increased supply or demand designed to trick market participants into executing against the orders he wanted filled.
Zhao is alleged to have engaged in the deceptive pattern approximately 2,300 times, which included 3,100 discrete instances of spoofing.
The CFTC is seeking civil monetary penalties, disgorgement of ill-gotten gains, trading and registration bans, and a permanent injunction against further violations of the federal commodities laws.
The criminal case against the trader is captioned USA v. Zhao (1:18-cr-00024).
