Seventh Circuit Upholds First-Ever Federal Spoofing Conviction

On August 7, 2017, the U.S. Court of Appeals for the Seventh Circuit unanimously upheld Michael Coscia’s conviction on spoofing and commodities fraud charges in United States v. Coscia, No. 16-3017 (KFR), 2017 WL 3381433 (7th Cir. Aug. 7, 2017), rejecting Coscia’s constitutional challenge to the anti-spoofing statutory provision and finding Coscia’s conviction adequately supported by the evidence and testimony adduced at trial.

Coscia was the first trader to be convicted under the anti-spoofing provision of the Commodity Exchange Act (“CEA”), 7 U.S.C. § 6c(a)(5). The Seventh Circuit’s decision upholding Coscia’s conviction marks the first time a federal appellate court has provided guidance on the scope of the anti-spoofing prohibition, and the Circuit’s comprehensive rejection of Coscia’s constitutional challenge fortifies the government’s ability to conduct additional investigations and prosecutions in an environment of increasingly aggressive regulation of the listed futures and derivatives markets.