By Janan Hanna
Bloomberg News
Monday, October 21, 2019
https://www.bloomberg.com/news/articles/2019-...he-bank-trad...
The criminal case against two former Deutsche Bank employees accused of fraudulent and manipulative precious-metals trading can proceed, after a federal judge today rejected their request for dismissal.
U.S. District Judge John J. Tharp in Chicago said prosecutors had properly used the wire-fraud statute to charge James Vorley and Cedric Chanu with spoofing, part of an alleged multiyear scheme to defraud other traders on the Commodity Exchange Inc., a venue run by CME Group Inc.'s Chicago Mercantile Exchange.
Several trade groups, including Bank Policy Institute, the U.S. Chamber of Commerce, and the Securities Industry and Financial Markets Association, had joined in the defendants' motion to dismiss.
Chanu and Vorley are accused in a 2018 indictment of placing buy or sell orders for futures contracts that they didn't intend to execute, creating a false picture of supply and demand, and profiting by executing trades on the opposite side.
Vorley, who lives in the U.K., and Chanu, a resident of France and the United Arab Emirates, argued that the federal wire-fraud statute was not intended to be used to prosecute spoofing conduct because the law requires making false statements, which the two say they did not make.
The judge rejected those arguments, saying in his 37-page ruling that omission of material information is also proscribed by the statute "if the omission was intended to induce a false belief and action to the advantage of the schemer and the disadvantage of the victim."
"The government's charges have always been and remain absurd," Vorley's lawyer, Roger Burlingame, said. "James' trading was perfectly legal, and no market participant could possibly have been defrauded by live, at-risk offers to trade on an anonymous exchange. We look forward to trial."
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The case is U.S. v. Vorley, 18-cr-00035, U.S. District Court, Northern District of Illinois (Chicago).
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