Nothing Learned from the CFTC Bullying a Win in the Thakkar Case

John Lothian

John Lothian

Executive Chairman and CEO

CFTC Commissioner Leadership Needed to End This Regulation by Litigation Case

If Jitesh Thakkar loses his case brought by the Enforcement Division of the CFTC, it will not be because the facts in the case are damning against him. It will be because the CFTC has bled Thakkar and his family and friends dry of the financial resources and the will to persevere. It will be because the CFTC’s tactic of drawing out the process and the costs for deposing him, former employees and even customers became too much for Thakkar to endure.

It will not be because of the facts in the case. Those are the same facts that helped Thakkar get the conspiracy charges thrown out in the criminal trial and the same facts that led the jury to vote 10 to 2 against the remaining charges of the Department of Justice’s case. The DOJ wisely dropped the case. The “flash crash spoofer” Navinder Sarao plainly stated in testimony in the criminal case that he did not conspire with Thakkar or his employees and never mentioned the word “spoofing.”

So what purpose will winning this case bring to the CFTC? It proves they can beat up on a little guy and win. Where I come from we call people who do that “bullies.” Not everyone has the resources of a Don Wilson to prove their innocence.

The CFTC will not bring any clarity to what software developers should do when working with traders to develop new bespoke functionalities by bullying a win from Thakkar. The CFTC will not have helped the industry understand where the lines are for this type of software development. Where is the liability? Where are the best practices?

Bludgeoning a small software development firm into a settlement proves nothing of value to the industry. It does nothing for the people in the markets, or the people of our nation. It is regulation by litigation, rather than by the time tested thoughtful process in place normally.

That all of this money is being spent by the CFTC to bleed Thakkar dry is appalling to me. This case was about $24,000 in software development. $24,000!!!!! The CFTC is spending multiples of that sum to continue this ill-conceived enforcement action. Is that really money well spent when we will learn nothing from the results?

I think not. By the way, John Lothian News has submitted a Freedom of Information Request to find out exactly what the CFTC is spending on this case. Let’s see what the real numbers are to bring a team in from Kansas City to litigate this case in Chicago. The CFTC has responded, in the true spirit of the case, by saying they can’t meet the 20 day statutory limit for FOIA cases and need at least another 10 days (see the exemptions).

The CFTC I know is smarter than this. The CFTC I know is fairer than this. And the CFTC I know is more prudent with their resources than this. 

What we need is some leadership at the CFTC to say “ENOUGH!” We need some commissioners to band together and tell Chairman Tarbert that the CFTC has lost this case already in the eyes of the industry, with over 2370 signatures on a petition asking for Justice for Jitesh, and for the CFTC Enforcement Division to drop the case.

We need these commissioners to tell Chairman Tarbert to have the Enforcement Division drop the case. We need their leadership now.

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