By Lauraann Wood

Law360, Chicago (September 22, 2020, 12:16 PM EDT) -- A pair of former Deutsche Bank traders on Tuesday told a jury — winnowed in size after a COVID-19 exposure scare — that prosecutors presented a case too incomplete, inaccurate and misleading to convict them for manipulating the precious metals market through an unlawful spoofing scheme.

During closing arguments in Illinois federal court, ex-traders James Vorley and Cedric Chanu asserted that the U.S. government hadn't pointed to any evidence during their seven-day trial that could prove they'd launched $2.6 billion worth of fake metals orders into the Chicago Mercantile Exchange with any criminal intent, let alone an intent to defraud others.

"Every single order" prosecutors characterized as fraudulent market spoofing was a real order that "could be hit thousands and thousands of times over" by the machines and algorithms Vorley and Chanu were largely trading against, Vorley's attorney, Roger Burlingame of Dechert LLP, told the jury.

The supercomputers Vorley and Chanu competed with make trading decisions based on guesses over market price direction, and "it is not fraud when a supercomputer makes a bad bet and guesses wrong," Burlingame said.

Prosecutors presented a case against the ex-traders that "reeks of reasonable doubt at every turn," partly because they cherry-picked and misrepresented the trading data they cited as evidence, Chanu's attorney, Michael McGovern of Ropes & Gray, told the jury

Other misdirection efforts included eliciting testimony from a former colleague who had "every reason to lie" after pleading guilty to crimes he committed with other traders, and calling on Deutsche Bank compliance professionals who couldn't speak to how the bank applied its policies while Vorley and Chanu were at the bank, McGovern said.

The government claims that Vorley and Chanu carried out their wire fraud scheme by placing large, false orders on the opposite side of quietly placed genuine orders with the intent to fake the impression of supply and demand and bend market prices in directions more favorable to their genuine orders. After executing their genuine orders, the traders would cancel their large opposite orders as quickly as possible, prosecutors claim.

But Vorley and Chanu blasted that contention during closings, arguing that the kind of deception the government charged in its case is typical of traders on the market.

"You're allowed to fake a pass and run the ball. You're trying to bluff the other team," Burlingame said. "You're trying to manipulate their impression of what's going to happen next. That's not fraud. It's allowed."

U.S. Department of Justice prosecutor Avi Perry urged the jurors not to buy into Vorley and Chanu's presentations. The traders' two defenses — that no one knew their trading conduct was wrong and that they weren't deceiving other traders — should be rejected because they are "completely at odds with each other," he said.

"Which is it?" Perry asked the jury during the government's rebuttal. "They're throwing everything at the wall and hoping that something sticks, and nothing does."

Vorley and Chanu spent the week of trial attacking the supercomputers and algorithms they were trading against, but people are behind that technology and "when you trick algorithms, you trick people," Perry told the jury. The traders were also wrong to assert that orders on the market get canceled incredibly often, he argued.

"What the defendants were doing is not normal, it is not OK, it was wrong and it was fraud," he said.

Market spoofing was the means to Vorley and Chanu's illegal end of making as much money as possible at the expense of other traders, Perry said. They misrepresented their intent to trade by launching all of their fake orders on the market, all with the intention "to deceive other people and to make money for themselves," he said.

"That's fraud," Perry told the jury. "All the sports analogies in the world don't change that."

The parties delivered their arguments after a possible COVID-19 exposure reduced the number of paneled jurors from 14 to 11 earlier in the day.

An ill juror called the court Tuesday morning to report he was experiencing symptoms such as body aches, coughing and shortness of breath and planned to get tested for COVID-19. U.S. District Judge John Tharp Jr. informed the parties and the remaining jurors, two of whom indicated they wanted to consult a medical professional after learning of their possible exposure to the novel coronavirus.

Prosecutors and the defense teams agreed to proceed with the trial before the 11 remaining jurors. Judge Tharp instructed the ill juror to report further health updates to the court.

The remaining jurors went home without reaching a verdict Tuesday, but will continue deliberations Wednesday morning.

The government is represented by Avi Perry, Brian Young and Leslie Garthwaite of the U.S. Department of Justice's Criminal Division.

Vorley is represented by Roger Burlingame, Matthew Mazur, Lauren Bowman and Christopher Burrichter of Dechert LLP.

Chanu is represented by Michael McGovern, Helen Gugel, Megan McEntee, Aaron Katz, Katherine McDonald and Laura Hoey of Ropes & Gray LLP.

The case is U.S. v. Vorley et al., case number 1:18-cr-00035, in the U.S. District Court for the Northern District of Illinois.

--Editing by Gemma Horowitz and Michael Watanabe.

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