Release Number 8793-23

CFTC Orders a Colorado Commodity Pool Operator and Its Owner to Pay More Than $475,000 for Fraud Violations

September 28, 2023

Washington, D.C. — The Commodity Futures Trading Commission today issued an order simultaneously filing and settling charges against Colorado-based Highland Quantitative Driven Investments LLC, a formerly registered commodity pool operator, and its owner, Colorado resident Michael T. Zatorski, a formerly registered associated person of Highland. 

The order finds the respondents violated anti-fraud provisions of the Commodity Exchange Act (CEA) by making $176,206.54 in unauthorized transfers from a commodity pool they operated to another entity controlled by Zatorski (Firm A). The respondents made these transfers in violation of the pool’s operating documents and without proper disclosure to the pool participants.  

The order requires the respondents to jointly and severally pay $176,206.54 in restitution and a $300,000 civil monetary penalty. The CFTC also orders them to cease and desist from further violating the CEA, as charged. In addition, the order imposes permanent registration bans against the respondents, a permanent trading ban against Highland, and permanent trading restrictions against Zatorski.  

Case Background 

The order finds, from October 2016 through October 2021, the respondents operated a pool that traded futures and/or options on futures, and which had approximately 60 participants and an initial net asset value of approximately $25 million. In pool operating documents, Highland represented that it would trade pool assets using algorithmic trading strategies Firm A developed for which it would pay certain monthly licensing fees to Firm A.     

The respondents, however, transferred funds directly from the pool (rather than from Highland) to Firm A and in amounts significantly more than allowed by the pool operating documents to go to Firm A. Some transfers were not authorized by the effective pool operating documents and/or were made without prior notice to the pool participants. The respondents eventually repaid some of the unauthorized transfers to the pool. In total, the respondents improperly transferred a net $176,206.54 from the pool to Firm A in excess of the amounts authorized by the pool operating documents.

The CFTC cautions that orders requiring repayment of funds to victims may not always result in the recovery of lost money because the wrongdoers may not have sufficient funds or assets. 

The CFTC appreciates the assistance of National Futures Association in this matter.  

The Division of Enforcement staff responsible for this matter are Stephen Turley, Monique McElwee, Rachel Hayes, Thomas Simek, Christopher Reed, and Charles Marvine, as well as former staff member Jo Mettenburg. Former Division of Enforcement intern Ron Mayer also assisted in this matter.  

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CFTC’s Commodity Pool Fraud Advisory

The CFTC has issued several customer protection Fraud Advisories and Articles, including the Commodity Pool Fraud Advisory, which provides information about a type of fraud involving individuals and firms, often unregistered, offering investments in commodity pools. The CFTC also strongly urges the public to verify a company’s registration with the CFTC before investing funds. If an entity is unregistered, a customer should be wary of providing funds to that entity. A company’s registration status can be found using NFA BASIC.

Customers and other individuals can report suspicious activities or information, such as possible violations of commodity trading laws, to the Division of Enforcement via a toll-free hotline 866-FON-CFTC (866-366-2382) or file a tip or complaint online or contact the Whistleblower Office. Whistleblowers may be eligible to receive between 10 and 30 percent of the monetary sanctions collected, paid from the CFTC Customer Protection Fund financed through monetary sanctions paid to the CFTC by violators of the CEA.