Whether spoofing violates the federal fraud statutes where a trader places a genuine, valid, fully executable order

QUESTION PRESENTED In the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, Congress created new civil and criminal liability for the trading practice of “spoofing,” defined by Congress as “bidding or offering with the intent to cancel the bid or offer before execution.” 7 U.S.C. § 6c(a)(5)(C); see id. § 13(a)(5). In doing so, Congress determined that violation of the new criminal anti-spoofing provision should be punishable as a “[d]isruptive practice[],” id. § 6c(a)(5)(C), subject to a maximum term of imprisonment of 10 years and a 5-year statute of limitations. Id. § 13(a); 18 U.S.C. §§ 3282(a). All parties agree that under Dodd-Frank, spoofing is now prohibited as a disruptive practice. Since Dodd-Frank’s enactment, however, the government has also started prosecuting spoofing under the general criminal fraud statutes. And it has brought such prosecutions for conduct that occurred both before and after Dodd-Frank’s passage, exposing defendants to as much as 30 years’ imprisonment per violation— three times the amount available under DoddFrank—and doubling the statute of limitations period to 10 years. See 18 U.S.C. §§ 1341, 1343, 1348, 3282(a), 3293(2). The question presented is whether spoofing violates the federal fraud statutes where a trader places a genuine, valid, fully executable order.