An American futures trader has been sentenced to three years in prison for manipulating markets by spoofing.
Michael Coscia, 54, owner of Panther Energy Trading, became the first US citizen to be criminally convicted of spoofing and was sentenced to three years in jail plus an additional two years of supervised release on Wednesday.
US judge Harry Leinenweber heard that Coscia was earning around $150,000 a month but tripled this earnings during the time when he was manipulating the markets.
Spoofing – where orders are sent to market and cancelled before execution to fool other market participants – was ruled illegal under the Dodd Frank Act.
The ruling comes after the US Securities Exchange Commission approved a change to clock synchronisation standards to stamp out market abuse and spoofing specifically.
The practice of spoofing has become a global focus for regulators who are anxious to police electronic trading more closely.
In March, 37-year-old British trader Navinder Singh Sarao lost a fight not to be extradited to the US in a UK High Court case for spoofing markets.
Sarao was accused of spoofing CME Group’s stock futures market over a period of four years. On one day in May 2010, it is understood he made a $900,000 from the process.