The legal and economic implications from recent UK spoofing cases

Greg Leonard, Yan Cao, Marlene Haas and Gregory Mocek
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Greg Leonard: Vice President, Cornerstone Research, UK
Yan Cao: Vice President, Cornerstone Research, USA
Marlene Haas: Manager, Cornerstone Research, USA
Gregory Mocek: Partner, Allen & Overy LLP, USA

Journal of Financial Compliance, 2020, vol. 4, issue 2, 179-193

Abstract: UK and US financial market regulators have intensified their efforts in securities and commodities markets to detect and pursue the type of disruptive trading behaviour referred to as ‘layering or spoofing’. Surveying the legal landscape of spoofing prosecutions and actions across the Atlantic, the authors note the UK’s fewer publicly announced enforcement actions relative to the USA. The UK has, however, taken a number of actions in recent years that signal its commitment to enforcing laws against market manipulation in general, and spoofing in particular. The authors discuss legal and economic implications of two prominent examples of UK spoofing cases: the Financial Conduct Authority’s (FCA) investigation of Michael Coscia and FCA vs DaVinci. The authors find that although the trading strategies employed by Coscia and DaVinci were different in some aspects, the two cases share important common characteristics that regulators appeared to have relied on to determine whether the conduct constituted ‘spoofing’.

Keywords: market abuse regulation; enforcement; disruptive trading; order book manipulation; spoofing (search for similar items in EconPapers)
JEL-codes: E5 G2 K2 (search for similar items in EconPapers)
Date: 2020
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