Former Deutsche Bank precious metals traders seek to dismiss indictment over “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.