A U.S. jury yesterday convicted high frequency trader Michael Coscia of commodities fraud and “spoofing” in the U.S. Government’s first criminal prosecution of the banned trading practice.

    The verdict may energize prosecutors to pursue market manipulation cases and spur some high speed traders to review their strategies, in which orders are sometimes executed or canceled within milliseconds after they are entered.

    “This is the clarity that people have been looking for — what exactly is spoofing, what defines it,” said Trace Schmeltz, an attorney specializing in white-collar crime at law firm Barnes & Thornburg who was not involved in the case.

    Coscia, owner of New Jersey-based Panther Energy Trading, was accused of entering large orders into futures markets in 2011 that he never intended to execute. His goal, prosecutors said, was to lure other traders to markets by creating an illusion of demand so that he could make money on smaller trades, a practice known as “spoofing.”

    Karen Seymour, a lawyer for Coscia, declined to comment after the verdict. Coscia, who took the stand in his own defense, denied wrongdoing.

    Prosecutors said he illegally earned US$1.4 million in fewer than three months in 2011 through spoofing.

    “The defendant’s trading activities disrupted the markets in his favor and against legitimate traders and investors,” said Zachary Fardon, U.S. Attorney for the Northern District of Illinois. (SD-Agencies)