The CFTC unravels a $960,000 Commodity Trading Advisor scam, accusing Brett G. Hartshorn of misleading customers and soliciting their funds. What will be Hartshorn's fate?
29 December, AtoZForex – The US Forex and futures regulator the Commodity Futures Trading Commission (CFTC) charged Brett G. Hartshorn with fraudulently soliciting at least $906,000 from retail clients. Mr. Hartshorn presented himself as a Commodity Trading Advisor and hereby illicitly managed the clients’ funds to invest in off-exchange forex transactions. However, he has never been registered as a Commodity Trading Advisor (CTA). Hence, the watchdog accuses Mr. Hartshorn of a Commodity Trading Advisor Scam as he failed to register with the CFTC for such a position.
Details of the Commodity Trading Advisor scam
Mr. Hartshorn of Sarasota, Florida has misappropriated at least $57,414 of client funds for his personal benefit. Hence, the CFTC filed a civil enforcement action in the US District Court for the Southern District of New York. Also, Mr. Hartshorn failed to produce books and records to the CFTC and failed to register with the CFTC as CTA.
Moreover, the watchdog’s complaint declares that Hartshorn fraudulently solicited at least 13 retail clients to invest in off-exchange forex on a leveraged, margined, or financed basis. That happened in the period from 18 June 2008 and 2014.
According to the complaint, Hartshorn met his clients at church or socially in his local community. Moreover, Hartshorn told his clients that he profitably traded Forex on behalf of himself and others and that he would limit the risk of loss to client funds. Also, he told most clients that they should expect substantial profits if they allowed him to trade Forex on their behalf.
Hartshorn used risky trading strategies
However, according to the CFTC’s complaint, Hartshorn’s statement to his clients was completely wrong. That is because he used risky trading strategies failing to disclose his pattern and history of losses trading on behalf of clients.
Moreover, Hartshorn did not inform his clients that under his “profit” sharing arrangement, he can be compensated even as client trading losses accumulated. Additionally, Hartshorn violated the Commodity Exchange Act and CFTC regulations by acting as a CTA without a registration.
What are CFTC’s demands?
The CFTC seeks restitution to defrauded customers, disgorgement of ill-gotten gains, a civil monetary penalty, permanent trading and registration bans. Also, the watchdog demands a permanent injunction against further violations of federal commodities law.
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