Illinois District Court grants extension of stay of “spoofing” case launched by CFTC

Maria Nikolova

The one-month extension of the stay concerns the case targeting ex-traders James Vorley and Cedric Chanu.

In response to a request by the United States Government, the Honorable Rebecca R. Pallmeyer of the Illinois Northern District Court has granted a one-month extension of the stay of a civil case targeting former traders James Vorley and Cedric Chanu. The Commodity Futures Trading Commission (CFTC), which accuses the duo of engaging into an unlawful trading practice known as spoofing, has not objected to the Government request.

Vorley and Chanu are targeted in a civil case (launched by the CFTC) and a criminal case (launched by the US Government). Both cases concern the same types of conduct, events, and overlapping time periods. The two complaints state that defendants Vorley and Chanu engaged in a form of fraud and manipulation known as “spoofing” (the unlawful practice of bidding or offering with the intent, at the time the bid or offer was placed, to cancel the bid or offer before it is executed) in the markets for precious metals futures contracts.

According to the CFTC complaint, the unlawful conduct lasted from around May 2008 through at least in or around July 2013. The criminal complaint alleges that the defendants’ scheme continued until in or around March 2015.

In May this year, the Court granted a motion by the United States Government stay the civil case against James Vorley and Cedric Chanu for a period of two months. On June 27, 2018, the Government requested an extension of the stay of the action brought by the CFTC in light of the parallel criminal proceedings against the traders.

Explaining the rationale for the sought extension, the Government said that the proposed stay of this civil action is necessary and appropriate to continue to protect the integrity of the criminal prosecution against Vorley and Chanu and to allow defendants to focus their resources on defending the criminal case.

According to the Department of Justice, a stay of the civil case would preclude Vorley and Chanu from using the civil discovery process to circumvent the limitations on criminal discovery that protect the integrity of criminal prosecutions, and to allow the defendants the ability to focus their resources on defending against the pending criminal case.

The Government noted that the stay would benefit the Court and the parties in the case by minimizing redundant litigation and narrowing the scope of discovery. In addition, such a stay is seen to relieve defendants Vorley and Chanu of having to choose between potentially invoking their rights against self-incrimination in this case (which could be used against them in the civil case) or testifying in the case (which could be used against them in the criminal case).

The case is captioned Commodity Futures Trading Commission v. Vorley et al (1:18-cv-00603).

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