Clifford Chance

U.S. Court Acquits FX Trader of Alleged Frontrunning

8 March 2019

An FX Trader was acquitted of charges that he had fraudulently traded ahead of a counterparty, based on a California federal court's finding that he and the counterparty had traded at armslength and that the trader had not violated any assurances or otherwise misled the counterparty. Rather than allow the case to go the jury, the court took the unusual step of acquitting the trader after the government had finished presenting its evidence. The acquittal, which comes less than two years after the conviction of an FX trader for broadly similar conduct, provides valuable guidance for FX dealers and other dealer businesses. Most importantly, it underscores the need for dealers engaging in principal-to-principal trading to provide proper disclosures to their counterparties and to ensure that their contracts, including ISDA Master Agreements and standard terms of business, clearly set forth that they will be trading at arms-length.

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