In 2018, a jury in Connecticut acquitted Andre Flotron, a precious metals trader at UBS, of spoofing charges. Prosecutors failed to prove that a trading strategy that involves canceling orders is enough to show an intent to spoof and not just the ordinary conduct of many traders. In many cases, the parties on the other side of the transactions were computers following trading algorithms rather than individuals who might be fooled by misleading orders.

The indictment of the three JPMorgan traders laid out a classic spoofing case, in which fake orders are intended to mislead the market. But rather than frame the case as just a commodities fraud, the prosecutors are using RICO to try to show that the defendants misled JPMorgan and defrauded customers of the bank by costing them money on their trading strategies.

The case is built around the traders’ goal of “maximizing trading profits and minimizing trading losses” for the precious metals desk and then concealing their “unlawful activities” from JPMorgan and the Commodity Futures Trading Commission. The indictment describes a scheme in which the defendants entered a “genuine” order, which was also called an “iceberg” order because the total amount sought was not obvious. The defendants then entered layers of “deceptive” orders that were much bigger than their genuine orders to “inject false and misleading information about the genuine supply and demand for precious metals futures contracts into the markets,” it said.

Prosecutors have two cooperating witnesses, John Edmonds and Christian Trunz, to help explain how the reported spoofing was accomplished and how JPMorgan was misled. Their testimony could be helpful in framing the case for the jury as one involving deception and not just spoofing.

Proving a RICO conspiracy charge is never easy. The government must show that the precious metals desk constituted an “enterprise” used to engage in wrongdoing and that both JPMorgan and its customers were deceived by the orders.