Ex-Deutsche Bank precious metals traders secure rescheduling of arraignment
The Illinois Northern District Court has agreed to postpone the arraignment of James Vorley and Cedric Chanu to a later date, closer to their trial.
Shortly after it became clear that James Vorley and Cedric Chanu are set to stand trial in May 2020, the ex-Deutsche Bank precious metals traders who are accused of spoofing have managed to secure rescheduling of their arrangement.
As per filing with the Illinois Northern District Court earlier today, the defendants’ unopposed motion to postpone arraignment is granted. The defendants have sought to postpone their arraignments to a date closer to trial. The defendants have confirmed that the Government does not oppose their motion.
Let’s note that an arraignment is a court proceeding at which defendants are informed of the charges against them and are asked to enter a plea to the charges. Quite often, at arraignment the court may decide the defendant will be released pending trial.
The arraignment of Vorley and Chanu initially scheduled before Magistrate Judge Cummings on December 18, 2019 is now stricken. The arraignment will be held before Judge Tharp at a date to be determined.
The indictment alleges that, from December 2009 through November 2011, Vorley and Chanu engaged in a scheme to defraud other traders on the Commodity Exchange Inc. (COMEX) that involved interstate wire communications.
COMEX used an electronic trading system called “Globex,” which allowed traders to trade futures contracts from anywhere in the world. During the relevant period, Vorley worked in London; Chanu worked first in London and later Singapore. The Globex servers, however, were located in Chicago and Aurora, Illinois, and that was the basis for venue in the Northern District of Illinois.
The indictment alleges that the duo sought “to deceive other traders by creating and communicating materially false and misleading information regarding supply or demand, in order to induce other traders into trading precious metals futures contracts at prices, quantities, and times at which they would not have otherwise traded, in order to make money and avoid losses for the coconspirators.”
Vorley and Chanu would place one or more orders for precious metals futures contracts on one side of the market (bid or offer), intending to cancel the orders before they could be accepted by other traders. The indictment refers to such orders as “Fraudulent Orders” because the defendants did not intend to execute them; instead, these orders were “intended. . . to deceive other traders” about the true supply or demand for the commodity in question. The indictment alleges that the Spoofing Orders “were material misrepresentations” regarding the defendants’ intent to trade those orders.
Contemporaneously with placing the Spoofing Orders, the defendants placed what are referred to as “Primary Orders” on the opposite side of the market. Unlike the Spoofing Orders, the defendants intended to execute the Primary Orders, which involved trades that were of smaller volume.
Vorley and Chanu allegedly profited from the scheme because the Spoofing Orders would deceive other traders about supply and demand, misleading them about the likely direction of the commodity’s price and making the defendants’ Primary Orders, on the other side of the market, look attractive.
