A US trader has become the first to be found guilty of "spoofing" some of the world's largest commodity futures markets in a landmark criminal case for authorities attempting to clamp down on deceptive trading driven by computers.
A jury in Chicago on Tuesday found Michael Coscia, 53, guilty on 12 counts, including intending to defraud other traders by flooding gold, corn, soyabeans, foreign exchange and crude oil futures markets with small orders with the intent of cancelling them.
The criminal case was a test of authorities' attempts to stamp out computer-driven misleading trading on the some of the world's most active markets.
Spoofing is rapidly placing orders with the intent to cancel them before they trade in order to trick other investors by creating the illusion of demand. While long prohibited by authorities and exchanges, it was explicitly banned under the US Dodd-Frank financial reforms of 2010.
The tactic has risen to prominence in futures markets with the emergence of electronic trading that has taken the place of face-to-face trading.
Coscia faces a maximum sentence of 25 years and a $25,000 fine on each of the six counts of commodities fraud and 10 years and a $1m fine on each of the six counts of spoofing. Judge Harry Leinenweber set sentencing for March next year.
"We're disappointed by the verdict," said Mr Coscia's lawyer Steven Peikin of Sullivan and Cromwell. "We believe this case presents many novel and complex issues, and Mr Coscia intends to pursue all of his legal options."