US Govt stands by proposed “ostrich” instruction in spoofing case

Maria Nikolova

The Government insists that Jitesh Thakkar, whose program was used for spoofing, might have deliberately ignored “red flags”.

Several days after Jitesh Thakkar, a software developer whose program was used for spoofing by London-based trader Navinder Sarao, opposed a proposed “ostrich” jury instruction, the US Government has stood by the proposal.

In a filing with the Illinois Northern District Court dated March 26, 2019, the Government argues that the proposed ostrich instruction has to stay. The concept of “ostrich” instruction derives from behavioral finance. The ostrich effect is the attempt made by investors to avoid negative financial information. The name comes from the misconception that ostriches hide their heads in the sand to avoid danger.

The US Government’s instruction concerns the possibility that Jitesh Thakkar avoided the information that his company’s software would be used to spoof.

Let’s explain what the proposed instruction actually says. The government proposes adding to Joint Proposed Instruction No. 25 the following supplemental language:

You may also find that the defendant acted knowingly if you find beyond a reasonable doubt that he believed it was highly probable that the NAVTrader program would be used to engage in spoofing, and that he deliberately avoided learning that fact. You may not find that the defendant acted knowingly if he was merely mistaken or careless in not discovering the truth, or if he failed to make an effort to discover the truth.

The Government argues it would be entitled to this ostrich instruction if trial evidence shows the defendant’s knowledge by conscious avoidance.

The Government notes that the ostrich instruction is meant “to inform the jury that a person may not escape criminal liability by pleading ignorance if he knows or strongly suspects he is involved in criminal dealings but deliberately avoids learning more exact information about the nature or extent of those dealings.”

An ostrich instruction is said to be appropriate where:

  • a defendant claims to lack guilty knowledge;
  • the government presents evidence from which a jury could conclude that the defendant deliberately avoided the truth.

Finally, the government argues that it expects to present evidence that may be interpreted as showing that the defendant ignored “red flags” or adopted an indifferent attitude to the criminal purpose of the “Back of Book” function that Jitesh Thakkar built for Sarao.

The Government notes that the defendant himself has made relevant comments. During a recorded, voluntary interview with the FBI, Jitesh Thakkar admitted that he would not build a program with the “Back of the Book” function today, and when asked to explain why, stated, “I would ask a lot of questions. I mean, he could potentially use it for spoofing. I wouldn’t build it today.”

The case continues at the Illinois Northern District Court.

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