Chicago, IL – The Commodity Futures Trading Commission (CFTC) has filed a civil complaint against Andrew Serotta and his firm, Logista Advisors LLC, alleging a scheme to manipulate crude oil and natural gas futures markets through spoofing. The complaint, filed in the U.S. District Court for the Northern District of Illinois, accuses Serotta, founder and principal of Logista, of engaging in manipulative and deceptive practices, failing to adequately supervise trading, and violating a prior CFTC order.
According to the CFTC, between January and April 2020, Serotta allegedly placed hundreds of large orders for crude oil and natural gas calendar spreads with the intent of canceling them before execution – a tactic known as spoofing. Simultaneously, he placed genuine orders on the opposite side of the market, designed to benefit from the reactions of other traders to his deceptive spoof orders. The agency claims this created a false impression of supply and demand, allowing Serotta to execute his legitimate orders at more favorable prices and in larger quantities.
This isn’t the first time Logista has faced scrutiny for spoofing. The CFTC notes that in 2017, Logista previously accepted a CFTC order related to supervisory failures stemming from an employee’s spoofing activity. “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,” stated Ian McGinley, Director of Enforcement. “As alleged, Logista and its principal engaged in additional spoofing, and manipulative and deceptive conduct.”
The CFTC is seeking civil monetary penalties, restitution, disgorgement of ill-gotten gains, and trading bans against both Serotta and Logista. A permanent injunction to prevent further violations of the Commodity Exchange Act and CFTC regulations is also being requested. The CME Group assisted the CFTC in the investigation. The case is being pursued by Meredith Borner, Katherine Paulson, Brandon Wozniak, Christopher Giglio, Patryk J. Chudy, Lenel Hickson, Jr., Manal M. Sultan, and former staff members David Newman, Candice Aloisi, and Gates Hurand, with assistance from the CFTC’s Spoofing Task Force.
Source: CFTC.gov
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