The dark side of FX trading: CFTC discloses Forex fraudster’s emails to FXCM

Maria Nikolova

Brett Hartshorn, who has resorted to emotional pleas with the Court in an effort to nix the fraud case against him, lost his nerve when FXCM closed his account.

Less than two months after Brett Hartshorn, accused of perpetrating a Forex fraud on his friends and members of his church, resorted to hyper-emotional pleas in an effort to have the case against him dismissed, the United States Commodity Futures Trading Commission (CFTC) has filed its response.

The documents, submitted by the CFTC earlier today, contain an opposition to the defendant’s motion to dismiss and a Declaration signed by Christopher Giglio, senior futures trading investigator at the regulator. The Declaration of Mr Giglio is accompanied by a number of exhibits, including excerpts of Mr Hartshorn’s correspondence with Forex Capital Markets LLC (FXCM), which, when the fraud was perpetrated, was still an active and licensed FX broker in the United States. The correspondence marks stark contrast with the claims that Hartshorn made in his latest Letter with the Court in which he stated how he was in a financial distress and wanted to make a positive difference in this world in the face of damage caused.

An email from Hartshorn sent to a sales representative of FXCM from April 2013 goes as follows:

“Hi Naji. I’m working on getting a friend to move his IRA to FXCM… It will be 400-500k. By the way, my real estate transaction closed. I am temporarily using the proceeds for another deal in Suriname…”

This, the CFTC notes, is at odds with Hartshorn’s purported financial hardship.

The email to FXCM from July 2015, sent shortly after the broker informed Hartshorn that his account will be closed sheds light on what can be called the “dark side” of a trader. The email goes as follows:

“To whom it may concern…

Just wondering why my account has been closed after 10 years… what have I done to FXCM (besides be a very active trader – generating thousands of dollars of revenue, and generating thousands of referrals to your company – all of whom opened accounts with FXCM and thus generated thousands more in revenue for your company?)

Oh, and also I stood by FXCM, and defended FXCM, when FXCM almost went BROKE and sank the whole ship due to YOUR vast overleverage, and very poor decision making on the CHF… good thing you were able to get a (I think it was about) $300,000,000.00 BAILOUT… (must be nice to use OPM to roll those dice with billions of dollars that are not your own). I choose to risk, MY risk capital, based on my decisions… NOT ON FXCM’s decisions!

So, we have ALL made mistakes. Some people are asked/begged by friends, for years, to partner and trade their account… like most partnerships, they try their damndest… stay up all night, every night till 8am, they eat/sleep/breathe the currency market… they study, read, analyze, network, etc… and still the great winning effort they tried to put forward goes very badly for all parties…

I don’t know what is taking so long for FXCM to even INITIATE the credit to my bank… (did I mention I managed money for banks for 14 years?) So, send me MY money!!

I feel as though I deserve a response as to why my account has been closed.

I will also decide, by your response, as to how I will proceed with my social media response, and also tell my story to all traders, (on about 40 different trading blogs, sites, chat groups, etc)…

All of the very, very best going forward,

Brett G. Hartshorn”

The CFTC is now seeking to counter Hartshorn’s arguments that the case should not proceed in the New York Southern District Court. Among the evidence that the regulator refers to is the fact that a number of the people defrauded by Hartshorn opened accounts with FXCM as a result of his activities and, hence, the fraud was at least partially executed in New York (where the broker’s address is). Also, the CFTC intends to call an FXCM representative to testify as to trading records.

In addition, the CFTC notes that the conduct that led to the violation of the CFTC registration and recordkeeping requirements occurred in New York.

Let’s recall that the CFTC has found that from at least June 18, 2008 to in or around 2014 Hartshorn fraudulently solicited at least 13 individuals including members of his church and individuals he met in his local community, to invest in off-exchange foreign currency on a leveraged, margined, or financed basis and to give Hartshorn discretionary authority to trade forex on their behalf. Hartshorn solicited and/or managed at least $906,000 in client funds.

The case, captioned U.S. Commodity Futures Trading Commission v. Hartshorn (1:16-cv-09802), continues at the New York Southern District Court.

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