Twitter has landed big law attorney, Vincent P. Schmeltz, in hot water. The co-chair of Barnes & Thornburg LLP’s financial and regulatory litigation group is facing “possible sanctions after a Federal Bureau of Investigation special agent spotted him taking photos and tweeting, both prohibited, during the widely publicized criminal trial of a high-speed trader convicted of spoofing,” according to Law360. It seems Schmeltz was not dissuaded from taking it to social media despite U.S. District Judge Harry D. Leinenweber’s clear rule against the use of text-based technology in his courtroom, and a number of four-foot signs indicating that taking pictures was prohibited during the trial.
Turns out, Schmeltz sent out nine tweets during proceedings on October 28th, each of which included a photograph of the evidence displayed during testimony at the Coscia trial. While all nine tweets were subsequently deleted, our friends over at Law360 got their hands on the tweets, which read as follows:
Programmer agrees with prosecutor that effort to stimulate market activity “could” impact pricing. #HFT #cosciatrial
Prosecution trying to impeach algo with this email. #HFT #cosciatrial
Coscia averaging over 10k in profits a day when manually doing what he wanted his algos to do. #HFT #cosciatrial
Cancellation logic was common in all algos, programmer testifies. #HFT #cosciatrial
Programmer note “used to pump mkt” not meant as spoofing reference—stimulate market activity, not pricing. #HFT
Algo cancelled trades after over 100 milliseconds—could’ve canceled quicker. “Real orders.” #HFT #cosciatrial
Screen shot of “Quote Trader,” the allegedly spoofing algo used by Michael Coscia. #cosciatrial #HFT
“Like a decoy” was legit price discovery effort – trying to find lurking algos. #cosciatrial
Coscia’s handwritten notes clearly documented his plan = no intent to deceive. #cosciatrial
U.S. District Judge Harry D. Leinenweber has ordered Schmeltz to provide reasons to the court later this month as to why he should not be sanctioned for flouting court rules by using his cellphone to take photos of evidence and tweeting during the proceedings.
This comes on the heels of a November 3rd ruling in USA v. Cosci, in which a jury convicted high-frequency trader Michael Coscia of commodities fraud and "spoofing” – the latter of which refers to the posting ofrequests to buy or sell futures, stocks and other products in financial markets without intending to actually follow through on those orders – in the U.S. government's first criminal prosecution of the banned trading practice. According to Zachary Fardon, U.S. Attorney for the Northern District of Illinois, Cosci’s “trading activities disrupted the markets in his favor and against legitimate traders and investors.”
According to Reuters, Coscia’s trial spanned seven days, but the jury in Chicago convicted him on six counts of commodities fraud and six counts of spoofing, all of the charges after deliberating for just about an hour. Each count of commodities fraud carries a maximum sentence of 25 years in prison and a $250,000 fine. Each count of spoofing carries a maximum sentence of 10 years in prison and a $1 million fine. A sentencing hearing is set for next year.