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CFTC Charges Highlands Capital With Defrauding Customers

The US Commodity Futures Trading Commission (CFTC) has filed an enforcement action charging Highlands Capital Management, based in San Francisco, California, and its principal Glenn Kane Jackson, with operating a fraudulent off-exchange foreign currency (forex) scheme.

Specifically, the CFTC complaint charged the defendants, in connection with the fraudulent scheme, with misappropriating customer funds, issuing false account statements to customers, misrepresenting Mr Jackson’s success and background as a forex trader and misrepresenting the reasons why defendants could not honor customer withdrawal requests.

According to the complaint, beginning in January 2006 and continuing through December 2009, the defendants solicited and accepted at least $4.3m from at least 23 customers for the purported purpose of trading forex. Of the approximate $4.3m provided to Jackson by customers, approximately $1.6m was traded and lost, about $600,000 was refunded to customers and the remaining $2.1m remains unaccounted for.

The complaint alleges that Jackson claimed never to have experienced a single losing year trading forex. Actual domestic forex trading accounts managed and controlled by Mr Jackson, however, had consistent net losses each year from 2005 to 2009.

Beginning as early as August 2008 and continuing through December 2009, the defendants allegedly sent customers account statements indicating that the defendants’ forex trading was consistently generating profits. Actually, however, forex trading during this period conducted by the defendants on behalf of the customers resulted in net losses.

In the continuing litigation, the CFTC is seeking rescission of all contracts and agreements, full restitution to customers and disgorgement of ill-gotten gains. The CFTC is also seeking civil monetary penalties and permanent injunctions against further trading and violations of the federal commodities laws.