Biglaw, Social Media

Biglaw Partner's Tweets Spark FBI Interest

Everyone loves to tweet, but try not to flout court rules while doing so.

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Stop tweeting. Just. Stop. It. Is this a challenging concept? If there is a question in your mind about whether a tweet (or the equivalent on other social media platforms) is appropriate, the 90s has some advice for you: check yourself before you wreck yourself.

Alas, a Barnes & Thornburg partner, Vincent P. (Trace) Schmeltz III (@traceschmeltz), did not heed that advice. And now we bring you your moment of schadenfreude for the day, which should also serve as a cautionary example.

Seems our buddy Trace could not stop himself from tweeting pictures of evidence presented during the well-publicized trial of Michael Coscia, who on November 3rd was convicted of spoofing using his high-frequency trading firm. All this despite U.S. District Judge Harry D. Leinenweber’s clear rule against the use of text-based technology in his courtroom. And giant four-foot signs indicating that taking pictures was prohibited.

I guess this partner thought the rules just didn’t apply to him. Much to the pleasure of rule-followers everywhere, Schmeltz’s actions were spotted by a FBI special agent. And the evidence was on Twitter for the world to see — at least until they were deleted. Law360 has the details on the offending Tweets:

Schmeltz sent out nine tweets that day, Oct. 28, and each includes a photograph of the evidence displayed during testimony at the Coscia trial, Friday’s show cause order said. The tweets were later deleted.

Though the tweets may be gone from Twitter, they were still recorded. According to court documents, the nine tweets Schmeltz’s sent that day are as follows:

Programmer agrees with prosecutor that effort to stimulate market activity “could” impact pricing. #HFT #cosciatrial

Prosecution trying to impeach algo with this email. #HFT #cosciatrial

Coscia averaging over 10k in profits a day when manually doing what he wanted his algos to do. #HFT #cosciatrial

Cancellation logic was common in all algos, programmer testifies. #HFT #cosciatrial

Programmer note “used to pump mkt” not meant as spoofing reference—stimulate market activity, not pricing. #HFT

Algo cancelled trades after over 100 milliseconds—could’ve canceled quicker. “Real orders.” #HFT #cosciatrial

Screen shot of “Quote Trader,” the allegedly spoofing algo used by Michael Coscia. #cosciatrial #HFT

“Like a decoy” was legit price discovery effort – trying to find lurking algos. #cosciatrial

Coscia’s handwritten notes clearly documented his plan = no intent to deceive. #cosciatrial

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The volume, detail and hashtagging used by Schmeltz seem to indicate a deliberate effort to document the trial and be a “thought leader” on the issues. But when it’s against the court’s rules, being FIRST just isn’t worth it.

And now he’s in some hot water. Chief Judge Rubén Castillo has issued an order to show cause as to why Schmeltz should not be sanctioned for violating Federal Rules of Criminal Procedure Rule 53, Local Rule 83.1, and General Order 09-015.

Hopefully others will learn from this example.

You can read the full order to show cause on the next page.

BigLaw Atty Faces Sanctions For Tweets At Spoofing Trial [Law360]

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