A high-frequency trader has been accused of manipulating the Chicago Mercantile Exchange to pocket $1.5 million.
Michael Coscia, 52, is the first person to face charges arising from high-frequency trading.
"Traders and investors deserve a level playing field," U.S. Attorney for Northern Illinois Zachary Fardon said in a statement announcing the indictment by a grand jury in Chicago.
The investigators say Coscia made his money by placing orders for commodities that he owned, orders that prompted the price to rise.
Then he would quickly sell his holdings at the higher price and then cancel the orders he placed.
Cancellation of the orders prompted prices to decline.
His trades took only fractions of a second to complete.
The practice of high-frequency trading is examined in a book, Flash Boys, by Michael Lewis.
It’s a Canadian, Brad Katsuyama, working for Royal Bank in New York, that provided Lewis with insights into how high-frequency traders make millions at the expense of ordinary investors and hedgers.