Release Number 5844-10
June 24, 2010
CFTC Charges California-Based Highlands Capital Management, LP and Glenn Kane Jackson with Defrauding Customers in an Off-Exchange Foreign Currency Scheme
Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) today announced the filing of an enforcement action charging Highlands Capital Management, LP, based in San Francisco, Calif., and its principal Glenn Kane Jackson of Tiburon, Calif., with operating a fraudulent off-exchange foreign currency (forex) scheme.
Specifically, the CFTC complaint charges the defendants, in connection with the fraudulent scheme, with misappropriating customer funds, issuing false account statements to customers, misrepresenting Jackson’s success and background as a forex trader and misrepresenting the reasons why defendants could not honor customer withdrawal requests.
Court order freezes defendants’ assets, protects records
On June 17, 2010, the same day the complaint was filed under seal, the Honorable Samuel Conti of the U.S. District Court for the Northern District of California entered an order, also under seal, freezing assets held or controlled by the defendants and prohibiting the destruction of books and records. Both documents were unsealed by the court on June 23, 2010.
According to the complaint, beginning in January 2006 and continuing through December 2009, the defendants solicited and accepted at least $4.3 million from at least 23 customers for the purported purpose of trading forex. Of the approximate $4.3 million provided to Jackson by customers, approximately $1.6 million was traded and lost, about $600,000 was refunded to customers and the remaining $2.1 million 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 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.
Although Jackson honored withdrawal requests from some customers, he responded to others with delay and numerous false explanations as to why customers’ money could not or would not be returned, according to the complaint. In total, the defendants allegedly failed to return or otherwise account for $2.1 million in customer funds.
In the continuing litigation, the CFTC seeks rescission of all contracts and agreements, full restitution to customers and disgorgement of ill-gotten gains. The CFTC also seeks civil monetary penalties and permanent injunctions against further trading and violations of the federal commodities laws.
Tiburon Police arrest Jackson on criminal charges
At the same time, the Tiburon Police Department arrested Jackson based on criminal charges filed by the Marin County District Attorney.
The CFTC appreciates the assistance of the Tiburon Police Department and the Marin County District Attorney.
The following CFTC Division of Enforcement staff members are responsible for this action: Matthew Elkan, Daniel Jordan, William McNish, Rick Glaser and Richard B. Wagner.
Last Updated: June 24, 2010