(Bloomberg) -- The criminal case against two former Deutsche Bank AG employees accused of fraudulent and manipulative precious-metals trading can proceed, after a federal judge on Monday rejected their request for dismissal.
U.S. District Judge John J. Tharp in Chicago said in a written ruling that prosecutors had properly used the wire-fraud statute to charge James Vorley and Cedric Chanu with spoofing, part of an alleged multiyear scheme to defraud other traders on the Commodity Exchange Inc., a venue run by CME Group Inc.’s Chicago Mercantile Exchange.
Chanu and Vorley were accused of placing buy or sell orders for futures contracts that they didn’t intend to execute, creating a false picture of supply and demand, and profiting by executing trades on the opposite side, according to an indictment in July 2018.
Vorley, who lives in the U.K., and Cedric Chanu, a resident of France and the United Arab Emirates, argued that the federal wire-fraud statute was not intended to be used to prosecute spoofing conduct because the law requires making false statements, which the two say they did not make.
The judge rejected those arguments, saying in his 37-page ruling that omissions of material information is also proscribed by the statute “if the omission was intended to induce a false belief and action to the advantage of the schemer and the disadvantage of the victim.”
A number of trade groups, including Bank Policy Institute, the U.S. Chamber of Commerce and the Securities Industry and Financial Markets Association, had joined in the defendants’ motion to dismiss.
The case is U.S. vs. James Vorley, 18-cr-00035, U.S. District Court, Northern District of Illinois (Chicago)
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