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The legal and economic implications from recent UK spoofing cases

Author

Listed:
  • Leonard, Greg

    (Vice President, Cornerstone Research, UK)

  • Cao, Yan

    (Vice President, Cornerstone Research, USA)

  • Haas, Marlene

    (Manager, Cornerstone Research, USA)

  • Mocek, Gregory

    (Partner, Allen & Overy LLP, USA)

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’.

Suggested Citation

  • Leonard, Greg & Cao, Yan & Haas, Marlene & Mocek, Gregory, 2020. "The legal and economic implications from recent UK spoofing cases," Journal of Financial Compliance, Henry Stewart Publications, vol. 4(2), pages 179-193, December.
    • Handle: RePEc:aza:jfc000:y:2020:v:4:i:2:p:179-193
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    More about this item

    Keywords

    market abuse regulation; enforcement; disruptive trading; order book manipulation; spoofing;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • K2 - Law and Economics - - Regulation and Business Law

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