In a high-stakes legal battle that could reshape the cotton options market, Sweet Futures 1, LLC has filed a complaint against T.C.B.C. EURL, Antoine Marquis, Excelia Investments Limited, and Anthony Scigliano. The lawsuit was lodged in the United States District Court for the Northern District of Illinois on June 14, 2024.
The plaintiff, Sweet Futures 1, LLC, alleges that throughout May 2024, the defendants engaged in illegal pre-arranged trades to manipulate prices in the cotton options market. This scheme allegedly resulted in over $1 million in damages to Sweet Futures. The company is seeking redress for breach of contract, fraud, conspiracy to commit fraud, unjust enrichment, and violations of the Commodity Exchange Act.
According to the complaint, Sweet Futures introduced EURL to Phillip Capital Inc., a futures commission merchant (FCM), for opening a commodity trading account. However, EURL provided false information regarding its financial status and submitted fraudulent documents purporting to show accounts with Marex Capital Markets Inc., another FCM. These falsified documents included an account statement from March 28, 2024, which Marex later confirmed was not issued by them.
The fraudulent activities did not stop there. In May 2024, EURL began trading Cotton No. 2 Options contracts on ICE Futures U.S., Inc. (IFUS). Simultaneously, Excelia Investments Limited opened a trading account through Marex and took opposite positions on the same trades executed by EURL. This pre-arranged trading between EURL and Excelia manipulated prices in an otherwise illiquid market. For instance, on May 3rd and May 8th of 2024 alone, multiple trades were executed at identical prices but on opposite sides by both entities.
Sweet Futures contends that this manipulative trading generated unlawful profits for Excelia while causing corresponding losses for EURL's account at Phillip Capital Inc., which Sweet Futures had to cover amounting to $1,029,785.24. The plaintiff also highlights that IFUS has banned all four defendants from trading due to evidence of pre-arranged trading and submission of false documents.
On May 28th and June 4th of this year respectively, Sweet Futures filed an emergency motion with the National Futures Association (NFA) seeking to freeze funds held at Marex in Excelia’s customer account as they are believed to be ill-gotten gains from the fraudulent scheme. An NFA arbitrator granted this emergency relief.
The plaintiff seeks several forms of relief including recovery of the unpaid debit balance amounting to $1 million plus prejudgment interest dating back to May 29th; attorneys’ fees; costs incurred during arbitration; punitive or exemplary damages; and any other relief deemed just by the court.
Representing Sweet Futures are attorneys Jeffry M. Henderson and Kyle L. Flynn from Greenberg Traurig LLP. The case will be presided over by judges from the United States District Court for the Northern District of Illinois under Case ID: 1:24-cv-04978.