Software developer accused of spoofing seeks info from CFTC and FCA

As the trial in the criminal case targeting Jitesh Thakkar, a software developer accused of conspiracy to commit spoofing, approaches, the efforts to boost the defense and secure all necessary evidence intensify.

Late last week, the defense counsel filed a Motion to compel with the Illinois Northern District Court. In the document, the defendant asks the Court for entry of an order compelling the government to produce all Brady, Giglio, and Jencks Act materials in the possession of the United States Commodity Futures Trading Commission (CFTC) and to make a good faith effort to obtain and produce all such material in the possession of the UK Financial Conduct Authority, the Metropolitan Police Service, and other British authorities.

Let’s translate this into more human terms. The Brady materials are those that include exculpatory evidence to the defendant. Giglio materials cover impeaching information too. Hence, on top of the exculpatory evidence, the government is required to provide all information that tends to challenge the credibility of its witnesses. Finally, under the Jencks Act, a party calling a witness is required to produce any recorded statements of that witness related to the witness’s testimony.

Jitesh Thakkar is the owner of a small software company in Chicago called Edge Financial Technologies Inc. He is charged with spoofing and conspiracy to commit spoofing for trades made by London-based trader Navinder Sarao using the company’s software. To investigate Jitesh Thakkar and Sarao, the Department of Justice (DOJ) and FBI partnered with the CFTC in the United States and with UK regulators. Because those entities were part of the investigative team in this case, the defense counsel insists that the US government is obligated to produce Brady, Giglio, and Jencks Act materials in the possession of those entities.

Let’s recall that, on February 14, 2018, Jitesh Thakkar 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.