The Honorable Sara L. Ellis of the Illinois Northern District Court granted Jiongsheng Zhao’s motion for extension of time to answer or otherwise plead.
Jiongsheng (“Jim”) Zhao, an Australian trader accused of engaging in an illicit trading practice known as “spoofing”, has had his request for extension of time to respond to the Commodity Futures Trading Commission (CFTC) complaint against him granted.
On Tuesday, October 16, 2018, the Honorable Sara L. Ellis of the Illinois Northern District Court approved the motion by the defendant. At the same time, the Judge granted a motion by the Department of Justice to intervene and stay the case. The DOJ has sought to intervene in this action and stay the action for an initial period of six months.
As a result of the motions by Zhao and the DOJ, the Court stays all proceedings in this case, including the defendant’s responsive pleading. The Court resets the status date to April 9, 2019.
Zhao has been incarcerated in Australia at the request of the United States Department of Justice since January 29, 2018 as he awaits extradition and an opportunity to formally respond to related criminal charges advanced against him by the DOJ.
In its Complaint, the CFTC alleges that from at least July 2012 through at least March 2017, Zhao repeatedly engaged in manipulative or deceptive acts in the E-mini S&P 500 futures contract market on the Chicago Mercantile Exchange (CME). Zhao is alleged to have employed a practice known as “spoofing” (bidding or offering with the intent to cancel the bid or offer before execution). He placed an order that he wanted to execute and thereafter entered a larger order on the opposite side of the market that he intended to cancel before execution. In placing these larger spoof orders, Zhao intentionally or recklessly sent false signals of increased supply or demand designed to trick market participants into executing against the orders he wanted filled.
Zhao is alleged to have engaged in the deceptive pattern approximately 2,300 times, which included 3,100 discrete instances of spoofing.
The CFTC is seeking civil monetary penalties, disgorgement of ill-gotten gains, trading and registration bans, and a permanent injunction against further violations of the federal commodities laws.
The case is captioned Commodity Futures Trading Commission v. Zhao (1:18-cv-00620).