CFTC seeks to depose programmers contacted by futures trader over spoofing software

The United States Commodity Futures Trading Commission (CFTC) is seeking to conduct additional discovery in its action against Jitesh Thakkar and Edge Financial Technologies, charged with aiding and abetting a spoofing scheme operated by futures trader Navinder Sarao.

On December 17, 2019, the parties in the action filed a joint status report with the Illinois Northern District Court, outlining their positions regarding fact discovery.

The document, seen by FinanceFeeds, makes it clear that the CFTC seeks to depose more programmers. In particular, the regulator wants to depose Sean Risteau of Greenline Financial Technologies and Michael Sanzo of YJT Solutions. Sarao contacted both companies, in addition to Edge, to develop his software program.

The names of these companies were mentioned by Thakkar and Edge into the summary judgment decision framework, citing purported actions or beliefs by both as supporting defendants’ arguments. For instance, Thakkar and Edge assert in their summary judgment papers that “Greenline was not able to work on the project, although not for any moral or legal reasons.” Likewise, the defendants describe in their summary judgment papers YJT’s response to Sarao’s solicitations, presumably to infer that YJT saw nothing improper in the solicitation, thus bolstering the defendants’ assertion that there was nothing improper to see.

The CFTC argues that it is entitled to discover the programmers’ actual reactions to Sarao’s solicitations. According to the regulator, the reactions by both programmers are relevant to assess the reasonableness and believability of the defendants’ asserted reaction—that they had no basis to know that Sarao proposed something improper.

As FinanceFeeds has reported, on December 4, 2019, the defendants filed a renewed motion for summary judgment with the Court.

Let’s recall that the when Court denied the first motion, it stated that the defendants could renew their motion after document discovery.

Shortly thereafter, Thakkar filed a motion in the related criminal case to modify the protective order so that he could provide the CFTC with all the documents the DOJ produced to Jitesh Thakkar in discovery. After Judge Robert W. Gettleman granted Thakkar’s motion, he copied and produced to the CFTC more than 800,000 pages of documents that the DOJ produced to him in the criminal case. The defendants also responded to the CFTC’s interrogatories and document requests in the civil case, producing another 1,068 pages of documents in addition to the voluminous documents previously produced by the defendants to the regulator.

Jitesh Thakkar and Edge Financial Technologies, Inc. request that the Court grant their motion, enter judgment in their favor, award them their costs and fees, and grant such other or further relief as this Court deems proper. If the CFTC insists it needs additional discovery to respond to the motion, the defendants request that the Court order the CFTC to provide an affidavit or declaration outlining exactly what discovery it still needs.

In April this year, Thakkar was acquitted on the conspiracy count in the criminal case brought by the Department of Justice against him. Soon after that, the Court declared a mistrial on the remaining aiding and abetting counts. Three jurors came out to speak to the attorneys and informed the attorneys that the jury voted 10 to 2 in favor of finding Jitesh Thakkar not guilty of the aiding and abetting charges. Following this result, the DOJ decided not to retry the case, and the Court dismissed the remaining counts against the defendant with prejudice.