New | US high-frequency trader faces jail term for spoofing

A US jury on Tuesday convicted high-frequency trader Michael Coscia of commodities fraud and "spoofing" in the government's first criminal prosecution of the banned trading practice.

The verdict may energise prosecutors to pursue market manipulation cases and spur some high-speed traders to review their strategies, in which orders are sometimes executed or cancelled within milliseconds after they are entered.

"This is the clarity that people have been looking for - what exactly is spoofing, what defines it," said lawyer Trace Schmeltz.

Coscia was accused of entering large orders into futures markets in 2011 that he never intended to execute. His goal, prosecutors said, was to lure other traders to markets by creating an illusion of demand so that he could make money on smaller trades, a practice known as "spoofing".

Coscia denied wrongdoing.

Prosecutors said he illegally earned US$1.4 million in fewer than three months in 2011 through spoofing.

"The defendant's trading activities disrupted the markets in his favour and against legitimate traders and investors," said prosecutor Zachary Fardon.