Michael Asaro and Richard Williams, 19 July 2017
New York Law Journal has published the article “‘Spoofing’: The SEC Calls It Manipulation, But Will Courts Agree?” written by Michael Asaro and Richard Williams Jr., partner and associate, respectively, in the litigation practice at Akin Gump.
Asaro and Williams analyze the act of spoofing, which they describe as “a relatively new form of alleged market manipulation,” under the open-market manipulation case law. They focus on a decision by the U.S. Court of Appeals for the 2nd Circuit in ATSI Communications v. Shaar Fund, which is seen as binding precedent.
The authors discuss the ATSI case in detail, noting that until its application to spoofing is clarified, “the SEC and defendants will both face meaningful litigation risk” in any spoofing enforcement action filed in the 2nd Circuit. As a result, they warn, “investment firms and broker-dealers who condone this activity, or who fail to have policies reasonably designed to prevent it, do so at their own risk.”