Federal regulators have filed civil charges against a Sarasota foreign exchange trader, alleging that he fraudulently solicited and managed nearly $1 million in client investments.
The U.S. Commodity Futures Trading Commission filed the civil enforcement action against Brett G. Hartshorn in the U.S. District Court for the Southern District of New York. The government complaint follows a 2015 Herald-Tribune investigation into Hartshorn’s business activities.
The CFTC alleges that Hartshorn found clients through his Sarasota church with promises of lofty gains. But instead, the trusting churchgoers found themselves out hundreds of thousands of dollars.
The federal agency alleges that Hartshorn fraudulently solicited at least $906,000 from 13 retail clients from 2008 to 2014, misappropriating at least $57,414 in client funds for his own personal benefit. He also failed to register with the CFTC as a commodity trading adviser, and did not produce books and records when asked by the CFTC, according to the complaint.
The Herald-Tribune reported in 2015 that Hartshorn enticed Southwest Florida residents who included a real estate broker, health care providers and even another former foreign exchange dealer to allow him to invest their money. One of his investors lost more than $200,000 through the trades. Another client told the newspaper that he lost $75,000 with Hartshorn in 40 days.
Foreign exchange traders look to earn quick profits by trading their U.S. dollars for foreign currency based on the speculation of future values.
For example, if the dollar was expected to weaken against the euro, a trader would sell dollars and buy euros, banking profits from the exchange. The strategy is commonly referred to in the industry as “forex,” short for “foreign exchange.” Trillions of dollars are traded each day on international forex markets.
Hartshorn, who could not be reached for comment for this story, told the Herald-Tribune in 2015 that he had invested the money as agreed upon and intended to make profits for his clients. He said each understood the risks, and that he “genuinely” gave his “best effort” to improve their accounts.
But the CFTC says Hartshorn’s statements to clients were false because Hartshorn employed risky trading strategies and failed to disclose his historic pattern of losses while trading on behalf of clients.
Hartshorn also did not disclose to clients that under his so-called “profit”-sharing arrangement, he could be – and often was – compensated, even as client losses mounted, according to the federal civil action.