A couple of months after it became clear that the Commodity Futures Trading Commission (CFTC) was inching closer to a settlement in its case against former Deutsche Bank traders James Vorley and Cedric Chanu, the proposed judgments were submitted at the Court.
On March 28, 2022, the CFTC filed a motion for entry of proposed orders with the Illinois Northern District Court. The proposed orders are the Final Judgment and Consent Order for Injunction, Civil Monetary Penalty and Other Equitable Relief Against Defendant James Vorley, and the Final Judgment and Consent Order for Injunction, Civil Monetary Penalty and Other Equitable Relief Against Defendant Cedric Chanu.
The Proposed Orders, if entered by the Court, will resolve all of CFTC claims against the former Deutsche Bank traders who stand accused of spoofing.
Vorley and Chanu each consented to the entry of the respective Proposed Orders without admitting or denying the allegations of the Complaint or any findings or conclusions in this Consent Order, except as to jurisdiction and venue, which they admitted. The Proposed Orders are largely the same, except each Order has findings of fact tailored to the Defendant in question.
Each Proposed Order includes:
- proposed findings of fact and conclusions of law;
- a permanent injunction from violating Sections 4c(a)(5)(C) and 6(c)(1) of the Act, and Regulation 180.1(a)(1) and (3);
- an injunction prohibiting each Defendant, for a period of five years, from trading on or subject to the rules of any registered entity, trading for or on behalf of any other persons, soliciting funds for investment in commodity interests, engaging in any activity requiring registration or exemption from registration and/or acting as a principal or agent of any registrant;
- and an order that each Defendant pay a civil monetary penalty in the amount of $150,000.
The CFTC filed this action on January 26, 2018. The Complaint alleges that Vorley and Chanu engaged in a five-year manipulative and deceptive scheme to trick other traders in the precious metals futures market by spoofing. To effect the scheme, the Complaint alleges that Vorley and Chanu placed large bids and offers with the intent to cancel those orders before execution, in order to induce other market participants to transact on smaller orders that Vorley and Chanu had placed on the opposite side of the market.
In other words, Vorley and Chanu are alleged to have tricked market participants into believing that certain of their orders were genuine in order to benefit themselves.
The Complaint alleges that, by virtue of this conduct, Defendants engaged in acts and practices that violated the anti-spoofing provision in Section 4c(a)(5)(C) of the Commodity Exchange Act (“Act”), 7 U.S.C. § 6c(a)(5)(C), (Count I), and the prohibition on manipulative and deceptive devices in Section 6(c)(1) of the Act, 7 U.S.C. § 9(1), and Commission Regulation (“Regulation”) 180.1(a)(1) and (3), 17 C.F.R. § 180.1(a)(1), (3) (2021) (Count II).