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Home Archive Volume 65 Volume 65, Issue 1 COMMENT: A Spoof of Justice: Double Jeopardy Implications for Convictions of Both Spoofing and Commodities Fraud for the Same Transaction
COMMENT: A Spoof of Justice: Double Jeopardy Implications for Convictions of Both Spoofing and Commodities Fraud for the Same Transaction

By Abram Olchyk | 65 Am. U. L. Rev. 239 (2015)

 

To the fastest go the spoils. The rise of automated algorithmic trading has transformed the American stock market into an institution prioritizing speed above all else. The relative chaos implicit in light-speed trading obscures the view of regulators, providing an enterprising new breed of traders ample opportunity to manipulate the market. The most recent scheme garnering the attention of state and federal agencies is known as spoofing, where a trader initiates a precise pattern of trades to lure in buyers or sellers—thereby raising or lowering the value of the commodity—trading on the distortion, then cancelling the baited trades before they fully execute.

In 2014, a federal grand jury indicted Michael Coscia on charges of criminal spoofing and commodities fraud. The indictment alleges Coscia spoofed several trades by entering into large buy contracts—for positions he held—to create a false sense of demand, selling off his positions at peak value, then cancelling the buy orders before they executed. Coscia’s indictment focused on six transactions and contains a charge of both spoofing and commodities fraud—a more general securities fraud statute—for each. This Comment will make the novel argument that a conviction for both spoofing and commodities fraud for the same transaction could be challenged under a theory of double jeopardy as unconstitutionally duplicitous punishment. To do so, this Comment will analyze the spoofing and commodities fraud statutes to show that proof of the former will always prove the latter, and that, therefore, a defendant cannot be convicted of both for the same transaction.

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