This Note assesses the viability of federal prosecutors’ use of the Racketeer Influenced and Corrupt Organizations Act (“RICO”) to prosecute spoofing, a market manipulating trading practice characterized by the cancellation of large orders meant to artificially alter market prices. Traditional spoofing convictions have been difficult to secure because of spoofing’s complicated and esoteric nature and difficult-to-prove elements. Now, for the first time, prosecutors in United States v. Smith have indicted alleged spoofers under RICO, which Congress designed with the intent to overcome evidentiary difficulties in organized crime prosecutions, particularly prosecutions of the American Mafia. However, the disparity between spoofing and the Mafia’s traditional street rackets raises the questions of whether federal prosecutors may viably use RICO to prosecute spoofing and whether doing so will produce significant implications.
This Note compares the legal contexts of spoofing and RICO to form the foundation of the discussion of whether prosecutors may viably use RICO to prosecute spoofing. This Note supports the use of RICO in spoofing cases, acknowledging RICO’s easier-to-prove elements and spoofing’s possible qualification as a number of RICO’s prohibited racketeering activities, and recommends that RICO’s use be complemented by effective use of cooperating witnesses. However, this Note also warns of potential negative side effects from using RICO to prosecute spoofing, such as the government incidentally overlooking solo spoofers due to excess concentration on groups of spoofers.
Algorithms and Omertà: A Discussion of Compatibility Between Seemingly Disparate Legal Spheres,
75 U. MIA L. Rev.
Available at: https://repository.law.miami.edu/umlr/vol75/iss1/9