Court orders US Govt to produce additional trading data disclosures in spoofing case

Maria Nikolova

The Government has until February 21, 2020, to produce additional data disclosures in the proceedings targeting former Deutsche Bank precious metals traders.

James Vorley and Cedric Chanu, the former Deutsche Bank precious metals traders accused of spoofing, have managed to secure partial Court approval of their motion for additional disclosures from the United States Government regarding the trading data that will be the principal evidence at trial.

An order signed by Judge John J. Tharp, Jr. of the Illinois Northern District Court on February 12, 2020, gives the Government about one week to produce a raft of trading data disclosures requested by the defendants.

In particular, until February 21, 2020, the Government will have to:

  1. identify the alleged “Primary Orders” in the 150 trading episodes it expects to present at trial;

  2. to identify its “High Priority” episodes; and

  3. to disclose the selection criteria it used in identifying potentially fraudulent trades.

Let’s recall that the Government has identified 150 trading “episodes” as to which it intends to present evidence at trial. The identified episodes are time periods during which trading activity occurred; each identifies a span of time ranging from a few seconds to more than half an hour. The episodes span a period of more than five years, beginning on June 11, 2008 and running to July 9, 2013. In addition to the date of the episode and the time period defining each episode, the Government’s list of these episodes identifies the product traded and the traders involved in each episode.

Vorley and Chanu have filed a motion to compel regarding the trading episodes the government has identified. First, the defendants seek identification of the alleged “Primary” and “Fraudulent” orders in each trading episode. The Court notes that Government provides no reason it should not be required to also identify the alleged “Primary Orders,” and since they were an integral part of the alleged scheme, the Court agrees that they should be specifically identified. As this is information that has, presumably, already been identified by the Government, it should be able to provide that information to the defendants promptly.

The traders also seek disclosure of the selection criteria that the government used to identify the initial collection of approximately 3,000 trading episodes that it culled from the records of the defendants’ trading activity.

The government has explained that it did not use objective selection criteria to identify its list of 150 trading episodes. Rather, it used selection criteria only to identify a collection of about 3,000 trading episodes, which it then analyzed individually to assess whether they were probative of fraudulent trading. A critique of the selection parameters is irrelevant, according to the government, because none of the trading episodes were selected for inclusion on the list of 150 trial episodes by virtue of such criteria. What matters, the government argues, is not how or why the government came to review a particular trading episode, but whether that episode is probative of fraudulent trading.

In its statement issued on February 12, 2020, the Court concludes that disclosure of the selection criteria initially used by the government to identify potentially fraudulent trading episodes is warranted.

Let’s note that the trial of Vorley and Chanu has been rescheduled and is now set to commence on May 5, 2020.

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