The Commodity Futures Trading Commission today filed a civil complaint in the U.S. District Court for the Northern District of Illinois against Logista Advisors LLC and Andrew Serotta, charging them with spoofing, engaging in a manipulative and deceptive scheme, failing to supervise, and for violating a prior CFTC order.
The scheme involved crude oil and natural gas futures contracts–specifically, calendar spread contracts–traded on CME and ICE Futures Europe. Serotta is the founder, principal, head trader, and a registered associated person of Logista, a registered commodity pool operator and commodity trading advisor.
In the complaint, the CFTC seeks civil monetary penalties, restitution, disgorgement of ill-gotten gains, registration and trading bans, and a permanent injunction against further violations of the Commodity Exchange Act and CFTC regulations, as charged.
“Six years ago, Logista accepted the CFTC’s entry of an order against it for supervision failures relating to an employee’s spoofing. Here we are again. As alleged, Logista and its principal engaged in additional spoofing, and manipulative and deceptive conduct. The CFTC will continue to vigorously prosecute such conduct—particularly by repeat offenders,” said Director of Enforcement Ian McGinley.
Case Background
The complaint alleges Serotta was spoofing (bidding or offering with the intent to cancel the bid or offer before execution) from approximately January 2020 through April 2020. According to the complaint, he would place hundreds of large orders for crude oil and natural gas futures–specifically, calendar spreads–he intended to cancel before execution (spoof orders), while placing orders on the opposite side of the same futures markets (genuine orders) that would benefit from market participants’ reactions to his spoof orders.
By placing the spoof orders, Serotta allegedly deceived other traders about supply and demand, misleading market participants about the likely direction of the commodity’s price, which made Serotta’s genuine orders appear more attractive to market participants and allowed Serotta to execute his genuine orders in larger quantities and at better prices than he would have without the spoof orders. The complaint further alleges that, by this conduct, Serotta and Logista failed to diligently supervise the fund’s trading and violated a 2017 CFTC order that found a supervision failure stemming from prior instances of spoofing at Logista. [See CFTC Press Release No. 7623-17]
The CFTC thanks the CME Group for its assistance in this matter.
The Division of Enforcement staff responsible for this action are Meredith Borner, Katherine Paulson, Brandon Wozniak, Christopher Giglio, Patryk J. Chudy, Lenel Hickson, Jr., and Manal M. Sultan, and former staff members David Newman, Candice Aloisi, and Gates Hurand. The Division of Enforcement’s Spoofing Task Force also assisted in this matter.
