Law \ Legal

Turns Out Spoofing Isn’t Harder To Prove Than Racketeering

Three years ago, when prosecutors were building a securities fraud case against three JPMorgan Chase precious metals traders, they were worried. The illegal activity they planned to allege, spoofing, was notoriously difficult to make stick—especially in shiny objects. So the U.S. Attorneys Office in Chicago got a little creative: In addition to charging Michael Nowak and Gregg Smith with all of the usual securities fraud counts—fraud, market manipulation and, of course, the spoofing itself—it added a few racketeering and conspiracy charges against the two and their hedge-fund sales specialist, Jeff Ruffo. Sure, RICO charges are every bit as slippery and difficult to prove as spoofing ones, but the government had a hell of a lot better track record on those than it did in spoofing cases.

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