US Govt seeks extension of stay of CFTC action against traders accused of spoofing

Maria Nikolova

The Government requests a one-month extension of the stay of the civil action in order to continue to protect the integrity of the criminal prosecution against James Vorley and Cedric Chanu.

After a series of civil lawsuits were launched by the United States Commodity Futures Trading Commission (CFTC) against traders accused of using an unlawful trading practice known as spoofing early this year, some of these actions have been put on hold due to parallel criminal proceedings against the defendants. Such is the case involving James Vorley and Cedric Chanu.

The traders are targeted in a civil case and a criminal case. Both cases concern the same types of conduct, events, and overlapping time periods. Both 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.

On May 2, 2018, the Honorable Rebecca R. Pallmeyer of the Illinois Northern District Court has 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 Wednesday, 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. The Government says that an indictment has not yet been returned in the criminal case. No trial date has been set in this civil action. The Government argues that a one-month extension of the 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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