Appeals court upholds ex-Deutsche Bank traders’ spoofing convictions

A logo of a branch of Germany’s Deutsche Bank is seen in Cologne, Germany, July 18, 2016. REUTERS/Wolfgang Rattay

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  • Vorley and Chanu argued their futures orders were not fraudulent
  • Court ruled that placing decoy orders that were intended to be cancelled was deceptive

(Reuters) – A U.S. appeals court upheld the convictions of two former Deutsche Bank metals traders for placing “spoof” orders for precious metals futures contracts, rejecting their argument that the trades were not fraudulent.

James Vorley and Cedric Chanu had been convicted in 2020 for what prosecutors called a scheme to place and then cancel decoy orders, a tactic known as spoofing, in order to manipulate prices in their favor.

On appeal, Vorley and Chanu argued that the orders were not deceptive because they could have been filled.

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But in a Wednesday decision, Circuit Judge Joel Flaum wrote for the 7th U.S. Circuit Court of Appeals in Chicago that it was deceitful to place orders with “the public perception of an intent to trade and a private intent to cancel in the hopes of financial gain.”

Lawyers for Vorley and Chanu did not immediately reply to requests for comment.

Each defendant had been sentenced to one year and one day in prison, but the sentences were postponed during the appeal.

Vorley traded futures for Deutsche Bank from 2007 to 2015 in London, while Chanu did so from 2008 to 2013 in London and Singapore.

The pair were indicted in 2018 and accused of spoofing between 2008 and 2013.

Prosecutors said their trades created a false sense of supply and demand, and induced other traders to make trades they would otherwise not have made.

Spoofing was recognized as a crime with the Dodd-Frank Act in 2010.

Vorley and Chanu were charged not with spoofing, which has a five year statute of limitations, but with wire fraud, which gives prosecutors 10 years to file charges when the fraud affects a bank.

The ruling came on the eve of another trial where three former JPMorgan Chase employees face fraud and racketeering charges for alleged spoofing. Opening arguments could begin on Friday.

The case is U.S. v. Vorley et al., in U.S. District Court for the Northern District of Illinois, No. 18-cr-00035.

For Vorley: Roger Burlingame, Matthew Mazur and Christopher Burrichter of Dechert

For Chanu: Michael McGovern, Helen Gugel, Aaron Katz and Katherine McDonald of Ropes & Gray

For the government: Avi Perry and Leslie Garthwaite of the U.S. Department of Justice’s Fraud Section

Read more:

Ex-Deutsche Bank trader gets year in prison in spoofing case

Ex-JPMorgan metals traders must face racketeering charges: judge

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Jody Godoy

Thomson Reuters

Jody Godoy reports on banking and securities law. Reach her at

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