Former Deutsche Bank precious metals traders seek to dismiss indictment over “inexcusable delays”

Maria Nikolova

James Vorley and Cedric Chanu, who are accused of spoofing, claim that the case has been plagued by repeated and inexcusable delays.

Former Deutsche Bank traders James Vorley and Cedric Chanu, who stand accused of spoofing, are seeking to dismiss the indictment in the criminal proceedings against them. A motion submitted by Vorley and Chanu on May 20, 2020 at the Illinois Northern District Court says that the case has been “plagued by repeated and inexcusable delays in disregard for the defendants’ and the public’s interests in a speedy trial”.

The former traders push for dismissal of the superseding indictment with prejudice under both the Speedy Trial Act and the Sixth Amendment.

According to Vorley and Chanu, one of the delays – 189 days of non-excludable time that elapsed while the defendants’ motion to dismiss was pending – violated the Speedy Trial Act. Upon determining that there had been a Speedy Trial Act violation, defense counsel reached out to the government and requested an opportunity to discuss the issue and potentially avoid burdening the Court with unnecessary motion practice during the COVID-19 public health emergency. The government refused to discuss the issue.

In addition to the Speedy Trial Act violation, other delays – including the government’s delay of the defendants’ arraignments in order to avoid reliance on a suspect tolling order, its alleged neglect of this case while the defendants’ motion to dismiss was pending, and its decision in late 2019 to supersede the indictment, produce voluminous discovery, and specify a new universe of trading sequences – have delayed into late 2020 (if not later) a case that could and should have been tried in 2018, Vorley and Chanu say.

According to them, the delays amount to a violation of the defendants’ Sixth Amendment rights.

The defendants in this case – James Vorley and Cedric Chanu, were precious metals traders at Deutsche Bank. 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.

Read this next

Digital Assets

OneCoin founder Ruja Ignatova is selling penthouse in UK

OneCoin founder Ruja Ignatova, who steered one of the world’s biggest cryptocurrency frauds, is back into the spotlight more than five years after vanishing from the public eye.

Digital Assets

Bitpay taps MoonPay to offer access to +60 cryptocurrencies

Crypto payment service provider Bitpay said it’s partnering with exchange and web3 infrastructure provider MoonPay to provide its users with easier access to buy cryptocurrency instantly.

Digital Assets

New York investigates Gemini over FDIC insurance claims

New York regulators are investigating Gemini over “false and misleading” claims the Winklevoss-owned exchange had made about whether client funds are insured by the government.

Digital Assets

Binance launches Mastercard-backed crypto card in Brazil

In partnership with Mastercard, crypto giant Binance is launching its pre-paid card offering cryptocurrency “rewards” on customers’ purchases.

Digital Assets

Circle publishes a breakdown of USDC reserves for December

Boston-based stablecoin issuer Circle has revealed a breakdown of its reserves for December 2022, as well as a complete list of USDC reserve custodians.

Retail FX

Monex reports lower revenues as crypto downturn bites

Monex Group has reported its Q3 2022 financial metrics, which saw a reversal in terms of its revenues as TradeStation was grappling with a crypto market crash that has tanked the profitability of its crypto business.

Inside View

Broadridge report finds 27% of firms’ overall IT budget goes to digital transformation

“A new chapter in digital transformation is emerging. In our work with clients across the financial services industry we see leading firms are already reaping the benefits from digitalization and the use of technologies such as AI and blockchain/DLT, as they adapt to economic headwinds and new competitive dynamics”

Executive Moves

Ripple announces Monica Long as President

“I’m incredibly honored to take on the role of President at Ripple as we expand deeper into crypto-enabled services like liquidity, settlement and custody.”

Executive Moves

Arabesque AI appoints Carolina Minio Paluello as CEO

“Arabesque AI is uniquely positioned to service the asset management industry’s need to meet the growing market demand for hyper customised portfolios.”