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Federal spoofing trial of Chicago software developer ends in hung jury

Robert Channick, Chicago Tribune on

Published in Science & Technology News

CHICAGO -- The spoofing trial of software developer Jitesh Thakkar -- an attempt by federal regulators to crack down on illegal high-frequency computer trading -- ended with a hung jury Tuesday in Chicago federal court.

Thakkar, 42, of Naperville, Ill., was charged last year with conspiracy and aiding and abetting the notorious British "flash crash" trader Navinder Sarao in a multiyear scheme that netted millions in illicit gains.

Ten of the 12 jurors had voted to acquit Thakkar, defense attorney Renato Mariotti told the Tribune after U.S. District Judge Robert Gettleman declared a mistrial.

"The vast majority of the jurors saw what I did -- that Jitesh Thakkar was innocent," Mariotti said. "The government didn't have enough evidence to bring this case, much less prove it beyond a reasonable doubt. The government should not pursue this misguided prosecution any further."

While several financial traders, including Sarao, have been convicted of spoofing, Thakkar was the first software developer to be tried under a 2010 federal anti-spoofing law.

Spoofing floods the market with bogus large orders to artificially trigger price movements. The spoof orders are canceled before they are filled, with the trader placing a smaller order on the opposite side of the market at a better price.

 

In 2011, Thakkar's small Chicago-based consulting firm, Edge Financial Technologies, developed a customized program that enabled Sarao to more successfully spoof the market.

Sarao made $40 million over six years trading E-Mini S&P 500 futures through the CME before pleading guilty in 2017 to federal charges of spoofing and wire fraud. Facing up to 30 years in prison, Sarao testified last week against Thakkar in a bid to reduce his sentence.

Last week, Gettleman acquitted Thakkar of conspiracy charges, but allowed the jury to decide two counts of aiding and abetting Sarao. At the core of Thakkar's case was whether he knew the software he designed for Sarao would be used for spoofing.

During closing arguments Monday, Mariotti said Thakkar was no different than a car salesman who unwittingly sells a getaway car to a bank robber. He said Thakker should not have been expected to deduce that the software features he created would be used for illicit purposes.

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