A jury in Chicago convicted commodities trader Michael Coscia of six counts of commodities fraud and six counts of "spoofing" on Tuesday. The Dodd-Frank Act defined spoofing as "bidding or offering with the intent to cancel the bid or offer before execution," and made the activity unlawful as a "disruptive practice." Bloomberg cited testimony from an FBI agent that the "trading showed that he would first place a small order and then large orders on the other side of the market that were subsequently canceled after he executed smaller trades."
The case was thought of as a test for the government's ability to pursue deceptive trading practices sometimes employed in high frequency trading. Coscia's conviction came after one hour of jury deliberation and represents the first verdict under the new provision. The CFTC and the Department of Justice are pursuing similar charges against Navinder Singh Sarao for allegedly causing the May 6, 2010 "Flash Crash."