Software developer accused of spoofing manages to get rid of controversial “ostrich” instruction

Maria Nikolova

As the jury trial against Jitesh Thakkar begins, his emergency motion to exclude the government’s proposed “ostrich” instruction is granted.

The latest filings with the Illinois Northern District Court in the case targeting Jitesh Thakkar, a software developer accused of spoofing, show that the jury trial against him begins. 

Thakkar, whose program was used for spoofing by London-based trader Navinder Sarao, has managed to secure dismissal of a proposed “ostrich” instruction. The US Government had proposed the instruction suggesting that Thakkar might have avoided the information that his company’s software would be used to spoof. (Hence, the term “ostrich”, as ostriches are falsely believed to hide their heads in the sand when they sense danger).

The Court has sided with the defendant and has granted his motion to exclude the government’s untimely proposed ostrich instruction.

In addition, Thakkar has managed to secure the Court’s consent for his motion to compel the government to produce documents from the CFTC, the U.K. Financial Conduct Authority, Metropolitan Police Service and other British Authorities. This motion has been granted by agreement.

Let’s recall that, on February 14, 2018, Jitesh Thakkar, the founder and principal of Edge Financial Technologies Inc., was charged in an indictment filed in the Northern District of Illinois with one count of conspiracy to commit spoofing and two counts of spoofing. Thakkar appeared for his arraignment on the indictment on February 22, 2018.

The indictment alleges that between October 2011 and April 2015, Thakkar and his co-conspirators engaged in a conspiracy to engage in spoofing—that is, bidding and offering with the intent, at the time the bid or offer was entered, to cancel the bid or offer before execution—through the placement of thousands of orders on the Chicago Mercantile Exchange (CME). The indictment alleges that Thakkar and his co-conspirators developed and delivered a customized software program that was used by Thakkar’s co-conspirator to engage in spoofing, including in the market for E-Mini S&P 500 futures contracts (“E-Mini”) on the CME. The indictment further charges Thakkar with spoofing in the E-Mini market on or about February 25, 2013 and March 8, 2013.

According to the allegations, it was the purpose of the conspiracy for Thakkar and his co- conspirators to unlawfully enrich themselves by:

  • developing a customized, automated program designed to place certain orders into the market while mitigating the risk that these orders would be “hit,” or executed;
  • selling, delivering, and attempting to sell and deliver the customized automated program to traders, so that the traders can use the program to place orders into futures markets, including the market for E-Mini futures contracts, that they intended to cancel before execution.

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