CFTC and software developer accused of aiding spoofing scheme have productive settlement talks

Maria Nikolova

The CFTC action against Jitesh Thakkar and his company Edge Financial Technologies continues after the end of the criminal proceedings against him.

The United States Commodity Futures Trading Commission (CFTC) has been engaged in settlement discussions with Jitesh Thakkar, a software developer charged with aiding and abetting a spoofing scheme.

On Thursday, May 30, 2019, the Honorable Andrea R. Wood of the Illinois Northern District Court granted a motion by the CFTC to reschedule the status conference in this case. The order sets a status conference for June 28, 2019 to address the progress of the settlement discussions.

According to the CFTC Complaint, Thakkar, president of Edge Financial Technologies, responded to a request by Trader A to design and develop a custom trading software application that would help Trader A spoof (bidding or offering with the intent to cancel before execution) and inject false information into the market regarding supply and demand for the E-mini S&P. Thakkar, along with Edge programmers working at Thakkar’s direction, worked closely with Trader A to meet Trader A’s desired specifications.

The CFTC Complaint alleges that Trader A repeatedly engaged in thousands of manipulative or deceptive acts and practices by spoofing. The Complaint further alleges that Thakkar and Edge aided and abetted Trader A’s spoofing by designing and developing for Trader A the custom trading software application he requested, which included a “Back-of-Book” function that Thakkar and Edge understood Trader A would use to engage in spoofing.

According to the Complaint, Trader A used the Back-of-Book function to spoof in the E-mini S&P at least between January 30, 2013 and October 30, 2013. The Complaint alleges that because Thakkar and Edge aided and abetted Trader A by designing and developing the Back-of-Book function, they are responsible for Trader A’s spoofing and manipulative or deceptive acts and practices using the Back-of-Book function from January 30, 2013 through October 30, 2013.

On March 21, 2018, the CFTC case against Thakkar was stayed pending the criminal proceedings against Jitesh Thakkar. A jury trial in the criminal case was held April 1-9, 2019. At the close of the government’s case, Mr Thakkar filed a Motion for Acquittal under Federal Rule of Criminal Procedure 29. The Court granted the motion as to the conspiracy count and acquitted Mr. Thakkar on that count, finding that no reasonable jury could find Mr. Thakkar guilty of conspiracy beyond a reasonable doubt.

The jury could not reach a unanimous verdict on the remaining aiding and abetting counts, and the Court declared a mistrial on April 9, 2019.

On April 23, 2019, the government moved to dismiss the remaining counts against Mr. Thakkar with prejudice. The Court granted the motion and dismissed the indictment with prejudice.

Earlier in May, the stay of the CFTC case against Thakkar was lifted. The CFTC informs the Court that since the lift of the stay, the parties have had productive discussions regarding settlement. The parties believe that having an opportunity to continue these discussions before having to file responsive pleadings and prepare and plan for discovery would facilitate a possible resolution of this action without unnecessary litigation and potentially minimize the impact of this action on judicial resources.

The Court has agreed to extend the deadlines as requested.

The case continues at the Illinois Northern District Court.

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