March 29, 2018

A U.S. appeals court on Thursday revived a lawsuit by five Korean traders accusing the New York high-frequency trading firm Tower Research Capital LLC and its founder Mark Gorton of conducting illegal “spoofing” trades at their expense.

The 2nd U.S. Circuit Court of Appeals in New York said Tower’s trades on the Korea Exchange (“KRX”) “night market” for futures contracts might qualify as “domestic” trades, entitling the traders to pursue class-action damages claims under the U.S. Commodity Exchange Act (CEA).

“Plaintiffs’ allegations make it plausible that parties trading on the KRX night market incur irrevocable liability in the United States,” Circuit Judge John Walker wrote.

The 3-0 decision also restored the plaintiffs’ unjust enrichment claims. It overturned a February 2017 ruling by U.S. District Judge Kimba Wood, and returned the case to her.

“We are looking forward to prosecuting this case,” the plaintiffs’ lawyer Michael Eisenkraft said in an interview.

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