CFTC amends its complaint against Logista Advisors
The Commodity Futures Trading Commission (CFTC) has amended its complaint against Logista Advisors LLC and its chief executive officer, Andrew Harris Serotta.
The amended complaint was filed on November 28, 2023 with the Illinois Northern District Court.
The amended complaint alleges that, from at least in or around January 2020 through at least in or around April 2020, Logista, acting through its head trader, principal, and chief executive officer, Serotta, engaged in manipulative and deceptive acts and practices in the natural gas futures and crude oil futures markets, while placing orders for and trading futures contracts on a registered entity.
By placing hundreds of orders with the intent to cancel them before execution, Defendants intentionally or recklessly sent false signals of increased buying or selling interest designed to trick other market participants into entering higher bids or lower offers, allowing Defendants to execute orders on the opposite side of their order book at advantageous prices.
This was not the first time Logista, a Houston, Texas, energy-trading firm, violated the Commodity Exchange Act 7 U.S.C. §§ 1–26, and Commission Regulations, 17 C.F.R. pts. 1–190 (2022).
On September 29, 2017, the CFTC instituted administrative proceedings against Logista, issuing an Order finding that, for several months in 2013 and 2014, Logista gave inadequate training, direction, and supervision to an employee trading crude oil futures.
These deficiencies resulted in the employee, while trading on a foreign futures exchange, repeatedly engaging in the disruptive trading practice commonly known as “spoofing,” i.e., bidding or offering with the intent to cancel his bid or offer before execution. The Commission further found that after the exchange’s compliance department detected the trader’s misconduct, Logista failed to satisfy its obligation to supervise an appropriate investigation that would enable Logista to provide accurate responses to the exchange’s inquiries.
Among other things, the 2017 Order required Logista to cease and desist from failing to diligently supervise the handling by its employees and officers of commodity interest accounts and other activities relating to Logista’s business as a Commission registrant, in violation of Regulation 166.3, 17 C.F.R. § 166.3 (2022).
During the Relevant Period, Defendants wrongfully obtained gains from the scheme involving spoofing and deceptive trading of hundreds of thousands of dollars, to the detriment of counterparties and other market participants.
Through this conduct, Defendants have engaged, are engaging, or are about to engage in fraudulent and manipulative acts and practices in violation of the Act and Regulations—specifically, Sections 4c(a)(5)(C) and 6(c)(1) of the Act, 7 U.S.C. §§ 6c(a)(5)(C), 9(1), and Regulation 180.1(a)(1) and (3), 17 C.F.R. § 180.1(a)(1), (3) (2022).
Logista also failed to provide supervision adequate to prevent Serotta from engaging in spoofing and manipulative and deceptive trading practices. Through this conduct, Defendants have engaged, are engaging, or are about to engage in violations of Regulation 166.3, 17 C.F.R. § 166.3 (2022), and the 2017 Order’s injunction against further supervision failures.
The Commission seeks civil monetary penalties and remedial ancillary relief, including, but not limited to, trading and registration bans, disgorgement, pre- and post-judgment interest, and such other relief as the Court may deem necessary and appropriate.
Unless restrained and enjoined by this Court, Defendants are likely to continue to engage in the acts and practices alleged in this Complaint and similar acts and practices.