HOUSTON, TX – September 25, 2024 – The Commodity Futures Trading Commission (CFTC) has filed a civil enforcement action against John Cartwright, a Houston resident, alleging insider trading related to natural gas futures contracts. The complaint, filed in the U.S. District Court for the Southern District of Texas, details a scheme where Cartwright improperly disclosed confidential client information for personal gain.
According to the CFTC, between June 2016 and September 2019, Cartwright, while associated with introducing broker Classic Energy LLC, revealed material nonpublic information from a customer regarding planned block trades in natural gas futures. Cartwright allegedly tipped this information to Peter Miller, a proprietary trader, who then exploited it for illicit profits.
The scheme involved Miller executing a spread trading strategy utilizing both non-arm’s length, fictitious block trades and physically-delivered natural gas futures contracts. By leveraging the advanced knowledge of the customer’s intended trades, Miller secured advantageous pricing and maximized profits. Cartwright reportedly confirmed the execution of these block trades to NYMEX, falsely presenting them as legitimate brokerage services.
The CFTC alleges that Miller shared the profits generated from these unlawful trades with Cartwright. The agency seeks monetary penalties, disgorgement of ill-gotten gains, restitution to harmed parties, trading and registration bans, and a permanent injunction against any further violations of the Commodity Exchange Act and CFTC regulations.
“Market intermediaries play a vital role ensuring markets for energy derivatives are competitive and liquid,” stated Ian McGinley, Director of Enforcement at the CFTC. “The CFTC vigorously pursues those who use their positions for personal gain by misappropriating their customers’ confidential information.”
The CFTC has previously taken action against Miller and Classic Energy LLC for their respective roles in this scheme, as detailed in CFTC Press Releases Nos. 8396-21 and 8634-22. The case is being prosecuted by Lauren Fulks, Alison Auxter, Thomas Simek, Christopher Reed, Charles Marvine, and former staff member Clem Ashley of the Division of Enforcement.
Source: CFTC.gov
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