Data Day in the case of U.S. v. Jitesh Thakkar

Thom Thompson

Thom Thompson

Contributing Editor

In an abbreviated third trial day, the U.S. Department of Justice rested its case against Jitesh Thakkar and Edge Financial Technologies. Thakkar is on trial for allegedly facilitating the criminally fraudulent spoofing trading of Navinder Sarao, who pleaded guilty to two criminal counts related to his spoofing of E-mini S&P futures in the first half of this decade.  

Wednesday was software and data day. The software analysis as well as much of the data analysis were built on evidence obtained by the government through subpoenas and search warrants, mostly in the course of the investigation of Navinder Sarao.

The prosecution’s first witness was an experienced data and computer professional named Mihran Yenikonshian, from the Boston consulting and software development firm Analysis Group. Yenikonshian had been hired by the government to determine whether the software program Thakkar produced for Sarao, NAVTrader, operated the way Sarao’s “requirements document” had specified. The prosecution led Yenikonshian through a detailed demonstration of how the requirements for the order types were translated into a software program by walking the court through the actual lines of code that implemented the requirements. It was a notably smooth performance, with split screens and competing pop-up boxes and text highlighted in three different colors. The prosecution hardly faltered throughout the hour long dissection of the evidence.  Yenikonshian concluded that the software that was delivered fulfilled the requirements.

Yenikonshian was followed by a colleague from Analysis Group, Lisa Pinhiero, who synchronized the NAVTrader program logs (which showed when the spoofing program was used)  with trading data from Sarao’s trading platform and market data provided by the CME. Pinheiro investigated the use and impact of the ‘back of book” function in Sarao’s trading during an approximately 1674 different times over the period. The order sizes averaged 365 contracts and they were usually placed at the third best price level. Sometimes these orders would be partially filled, but not often. The software worked as it was supposed to, according to the evidence.

Renato Mariotti, Thakkar’s attorney, established during the cross-examinations of both Analysis Group witnesses that Thakkar had not been present or involved in placing any of the “back of book” orders.

Thursday the defense will mount its case, but before that happens Judge Gettlemen will hear arguments and possibly rule on new motions from the defense about the jury instructions. The prosecution voiced unspecific but apparently weighty complaints to the judge Wednesday and both sides will be heard Thursday starting at 9:30. The jury instructions are going to be key in this case since the facts are not much in dispute. The government has not provided convincing, smoking gun, beyond-a-reasonable-doubt evidence that Thakkar was aware that NAVTrader was going to be used for spoofing, let alone that he intended for it to be used. The specification of the legal standard that Thakkar will be held to is up for discussion Thursday.

Otherwise the trial is ahead of schedule and Thakkar will be called as a witness either late Thursday morning or in the afternoon.


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