1 

UNITED STATES OF AMERICA 

Before the 

COMMODITY FUTURES TRADING COMMISSION 

_____________________________________

) 

In the Matter of: ) 

 ) 

Michael T. Zatorski and Highland ) CFTC Docket No. 23-55

Quantitative Driven Investments LLC, ) 

 ) 

Respondents. ) 

_____________________________________) 

ORDER INSTITUTING PROCEEDINGS PURSUANT TO 

SECTION 6(c) AND (d) OF THE COMMODITY EXCHANGE ACT, 

MAKING FINDINGS, AND IMPOSING REMEDIAL SANCTIONS 

I. INTRODUCTION

The Commodity Futures Trading Commission (“Commission”) has reason to believe that 

beginning no later than October 2017 and continuing through at least December 2020 (the 

“Relevant Period”), Respondents Michael T. Zatorski (“Zatorski”) and Highland Quantitative 

Driven Investments LLC (“Highland”) (together, “Respondents”) violated Sections 4b(a)(1)(A) 

and 4o(1)(A) and (B) of the Commodity Exchange Act (the “Act”), 7 U.S.C. §§ 6b(a)(1)(A), 

6o(1)(A), (B). Therefore, the Commission deems it appropriate and in the public interest that 

public administrative proceedings be, and hereby are, instituted to determine whether 

Respondents engaged in the violations set forth herein and to determine whether any order 

should be issued imposing remedial sanctions. 

In anticipation of the institution of an administrative proceeding, Respondents have 

submitted an Offer of Settlement (“Offer”), which the Commission has determined to accept. 

Without admitting or denying any of the findings or conclusions herein, Respondents consent to 

the entry of this Order Instituting Proceedings Pursuant to Section 6(c) and (d) of the Commodity 

Exchange Act, Making Findings, and Imposing Remedial Sanctions (“Order”) and acknowledge 

service of this Order.1

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 Respondents consent to the use of the findings of fact and conclusions of law in this Order in this proceeding and 

in any other proceeding brought by the Commission or to which the Commission is a party or claimant, and agree 

that they shall be taken as true and correct and be given preclusive effect therein, without further proof. 

Respondents do not consent, however, to the use of this Order, or the findings or conclusions herein, as the sole 

basis for any other proceeding brought by the Commission or to which the Commission is a party or claimant, other 

than: a proceeding in bankruptcy or receivership; or a proceeding to enforce the terms of this Order. Respondents 

do not consent to the use of the Offer or this Order, or the findings or conclusions in this Order, by any other party in 

any other proceeding. 
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II. FINDINGS 

The Commission finds the following: 

A. Summary

During the Relevant Period, Highland, a registered Commodity Pool Operator (“CPO”), 

and Zatorski, a registered Associated Person (“AP”) of Highland for part of the Relevant Period, 

made $176,206.54 in unauthorized transfers from a commodity pool they operated—Highland 

Quantitative Investment Funds LP (the “Pool”)—to a Zatorski-controlled entity, in contravention 

of the Pool’s Private Placement Memorandum (“PPM”) and Limited Partnership Agreement 

(“LPA”) and without proper disclosure to Pool participants. 

Respondents violated Sections 4b(a)(1)(A) and 4o(1)(A) and (B) of the Act, 7 U.S.C. 

§§ 6b(a)(1)(A), 6o(1)(A), (B), by making the unauthorized transfers. 

B. Respondents 

Highland Quantitative Driven Investments LLC, a Delaware Limited Liability 

Company and Colorado Foreign Limited Liability Company, operated as the CPO of the Pool. 

Highland was registered with the Commission as a CPO from August 2, 2016 through 

January 27, 2021. 

Michael T. Zatorski, a Colorado resident, was the owner, manager, and control person 

of Highland. Zatorski was a Principal of Highland from July 15, 2016 through January 27, 2021 

and was registered with the Commission as an AP of Highland from June 25, 2018 through 

January 27, 2021. 

C. Facts 

From October 2016 through October 2021, Respondents operated the Pool, which traded 

futures and/or options on futures in crude oil, interest rates, treasury bonds, E-Mini S&P 500, 

and E-Mini Nasdaq, among other things. The Pool had approximately 60 participants and an 

initial net asset value of around $25 million. According to the Pool’s PPM and LPA (“operating 

documents”), Highland represented to Pool participants that it would trade the Pool’s assets 

using algorithmic trading strategies developed by another Zatorski-controlled entity (“Firm A”) 

pursuant to a licensing agreement with Highland. In exchange for the use of the algorithmic 

trading strategies, the original Pool operating documents provided that Highland would pay 

Firm A up to $2,000 per month. 

 

Notwithstanding that provision in the Pool operating documents, during the Relevant 

Period, Respondents transferred significantly more than $2,000 per month in Pool funds directly 

to Firm A. In 2018 and 2019, Respondents made and/or attempted to make multiple 

amendments to the Pool operating documents that purported to both retroactively and 

prospectively permit the Pool, rather than Highland, to pay substantially increased monthly fees 

to Firm A. Despite Respondents’ attempts to validate the total amount transferred from the Pool 

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. Respondents eventually repaid some of 
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the unauthorized transfers to the Pool. In total, and taking into account these repayments, 

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. 

III. LEGAL DISCUSSION 

A. Respondents violated Section 4b(a)(1)(A) of the Act. 

Section 4b(a)(1)(A) of the Act, 7 U.S.C. § 6b(a)(1)(A), provides that it shall be unlawful, 

in or in connection with a futures contract made on or subject to the rules of a designated 

contract market, for or on behalf of any other person, to cheat or defraud, or attempt to cheat or 

defraud, such other person. Liability attaches under Section 4b(a) of the Act with: “(1) the 

making of a misrepresentation, misleading statement, or a deceptive omission; (2) scienter; and 

(3) materiality.” CFTC v. JBW Capital, 812 F.3d 98, 106 (1st Cir. 2016). 

By failing to advise Pool participants of certain unauthorized transfers, Respondents 

violated Section 4b(a)(1)(A) of the Act. An omission of a material fact is a misleading 

misrepresentation if the circumstances mandated disclosure to ensure that the representations 

were not misleading. In re Sogemin Metals Inc., CFTC No. 00-44, 2000 WL 136059, at *4 (Feb. 

7, 2000) (consent order) (citing Modlin v. Cane, CFTC No. 97-R083, 1998 WL 429622, at *8 

(July 30, 1998)). By transferring fees above those expressly allowed under the Pool operating 

documents and contemporaneously effective amendments, Respondents misled Pool participants 

as to the expenses the Pool incurred. Cf. CFTC v. Mankad, No. CV-21-01719-PHX-DJH, 2022 

WL 17752224, at *6 (D. Ariz. Oct. 19, 2022) (consent order) (finding CPO’s failure to disclose 

certain disproportionately higher commissions and AP’s unilateral discretion to increase trading 

costs misleading under Sections 4b(a)(1)(A) and (C) and 4o(1)(A) and (B) of the Act). 

Respondents acted with the requisite scienter to support a violation of Section 4b(a) of 

the Act. To prove that conduct is intentional, the CFTC need only show that a defendant’s 

actions were “intentional as opposed to accidental.” Lawrence v. CFTC, 759 F. 2d 767, 773 (9th 

Cir. 1985). To prove that conduct is reckless, the CFTC must show that it “departs so far from 

the standards of ordinary care that it is very difficult to believe the [actor] was not aware of what 

he was doing.” Drexel Burnham Lambert Inc. v. CFTC, 850 F.2d 742, 748 (D.C. Cir. 1988) 

(alteration in original) (internal quotation marks and citation omitted); see CFTC v. 

R.J. Fitzgerald & Co., 310 F.3d 1321, 1328 (11th Cir. 2002) (“[S]cienter is established if 

Defendant[s] intended to defraud, manipulate, deceive, or if Defendant[s’] conduct represents an 

extreme departure from the standards of ordinary care.” (citation omitted)). At the very least, 

Respondents’ conduct in failing to prospectively notify Pool participants of transfers in excess of 

authorized expenses was reckless. 

Finally, failing to properly and timely notify Pool participants of $176,206.54 in net 

undisclosed transfers in excess of those expressly limited by contemporaneous Pool operating 

documents and amendments is material. See R.J. Fitzgerald & Co., Inc., 310 F.3d at 1328-29

(noting that a misrepresentation or omission is material if “a reasonable investor would consider 

it important in deciding whether to make an investment”). 
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Zatorski controlled Highland, directly or indirectly, and did not act in good faith or 

knowingly induced, directly or indirectly, Highland’s acts in violation of the Act; therefore, 

pursuant to Section 13(b) of the Act, 7 U.S.C. § 13c(b), Zatorski is liable for Highland’s 

violation of Section 4b(a)(1)(A) of the Act. 

Zatorski’s acts in violation of the Act, as discussed above, occurred within the scope of 

his position as an official or agent of Highland or when he was otherwise acting for Highland; 

therefore, Highland is liable for Zatorski’s acts, omissions, and failures in violation of 

Section 4b(a)(1)(A) of the Act, pursuant to Section 2(a)(l)(B) of the Act, 7 U.S.C. § 2(a)(l)(B), 

and Commission Regulation (“Regulation”) 1.2, 17 C.F.R. § 1.2 (2022). 

B. Respondents violated Section 4o(1)(A) and (B) of the Act. 

Section 4o(1) of the Act, 7 U.S.C. § 6o(1), makes it unlawful for a CPO or an AP of a 

CPO using the instrumentalities of interstate commerce, directly or indirectly: 

(A) [T]o employ any device, scheme, or artifice to defraud any client or 

participant or prospective client or participant; or 

(B) [T]o engage in any transaction, practice or course of business which 

operates as a fraud or deceit upon any client or participant or prospective 

client or participant. 

The same conduct that constitutes violations of Section 4b(a)(l)(A) of the Act, as described 

above, also constitutes violations of Section 4o(1) of the Act. See, e.g., Stotler & Co. v. CFTC,

855 F. 2d 1288, 1290-91 (7th Cir. 1988); see also CFTC v. Skorupskas, 605 F. Supp. 923, 932 

(E.D. Mich. 1985). Further, proof of scienter is not required under Section 4o(l)(B) of the Act. 

In re Kolter, CFTC No. 93-19, 1994 WL 621595, at *7 (Nov. 8, 1994). 

During the Relevant Period, Highland, as CPO of the Pool, and Zatorski, as an AP of 

Highland, transferred by wire and ACH electronic transfer a net total of $176,206.54 in 

unauthorized and undisclosed funds to Firm A. Therefore, Respondents violated Section 

4o(1)(A) and (B) of the Act. See Mankad, 2022 WL 17752224, at *6 (finding that CPO’s failure 

to disclose AP’s disproportionately higher commissions and unilateral exercise of discretion to 

increase trading costs, in light of pool operating documents, violated Sections 4b(a)(1)(A) and 

(C) and 4o(1)(A) and (B) of the Act); In re RNS Holdings LP, CFTC No. 16-28, 2016 WL 

5582340, at *4 (Sept. 20, 2016) (consent order) (finding unauthorized withdrawals of pool funds 

in excess of amount authorized by pool operating documents violated Section 4o(1)(B) of the 

Act). 

Zatorski controlled Highland, directly or indirectly, and did not act in good faith or 

knowingly induced, directly or indirectly, Highland’s acts in violation of the Act; therefore, 

pursuant to Section 13(b) of the Act, 7 U.S.C. § 13c(b), Zatorski is liable for Highland’s 

violation of Section 4o(l)(A) and (B) of the Act. 

Zatorski’s acts in violation of the Act, as discussed above, occurred within the scope of 

his position as an official or agent of Highland or when he was otherwise acting for Highland; 
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therefore, Highland is liable for Zatorski’s acts, omissions, and failures in violation of 

Section 4o(l)(A) and (B) of the Act, pursuant to Section 2(a)(l)(B) of the Act and Regulation 1.2. 

IV. FINDINGS OF VIOLATIONS 

Based on the foregoing, the Commission finds that, during the Relevant Period, 

Respondents violated Sections 4b(a)(1)(A) and 4o(1)(A) and (B) of the Act, 7 U.S.C. 

§§ 6b(a)(1)(A), 6o(1)(A), (B). 

V. OFFER OF SETTLEMENT 

Respondents have submitted the Offer in which they, without admitting or denying the 

findings and conclusions herein: 

A. Acknowledge service of this Order; 

B. Admit the jurisdiction of the Commission with respect to all matters set forth in this 

Order and for any action or proceeding brought or authorized by the Commission based 

on violation of or enforcement of this Order; 

C. Waive: 

1. The filing and service of a complaint and notice of hearing; 

2. A hearing; 

3. All post-hearing procedures; 

4. Judicial review by any court; 

5. Any and all objections to the participation by any member of the Commission’s 

staff in the Commission’s consideration of the Offer; 

6. Any and all claims that they may possess under the Equal Access to Justice Act, 

5 U.S.C. § 504, and 28 U.S.C. § 2412, and/or the rules promulgated by the 

Commission in conformity therewith, Part 148 of the Regulations, 17 C.F.R. 

pt. 148 (2022), relating to, or arising from, this proceeding; 

7. Any and all claims that they may possess under the Small Business Regulatory 

Enforcement Fairness Act of 1996, Pub. L. No. 104-121, tit. II, §§ 201–253, 

110 Stat. 847, 857–74 (codified as amended at 28 U.S.C. § 2412 and in scattered 

sections of 5 U.S.C. and 15 U.S.C.), relating to, or arising from, this proceeding; 

and 

8. Any claims of Double Jeopardy based on the institution of this proceeding or the 

entry in this proceeding of any order imposing a civil monetary penalty or any 

other relief, including this Order; 
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D. Stipulate that the record basis on which this Order is entered shall consist solely of the 

findings contained in this Order to which Respondents have consented in the Offer; and 

E. Consent, solely on the basis of the Offer, to the Commission’s entry of this Order that: 

1. Makes findings by the Commission that Respondents violated Sections 

4b(a)(1)(A) and 4o(1)(A) and (B) of the Act, 7 U.S.C. §§ 6b(a)(1)(A), 6o(1)(A), 

(B); 

2. Orders Respondents to cease and desist from violating Sections 4b(a)(1)(A) and 

4o(1)(A) and (B) of the Act; 

3. Orders Respondents to pay, jointly and severally, restitution in the amount of one 

hundred seventy-six thousand, two hundred six dollars and fifty-four cents 

($176,206.54), plus any post-judgment interest; 

4. Orders Respondents to pay, jointly and severally, a civil monetary penalty 

(“CMP”) in the amount of three hundred thousand dollars ($300,000), plus any 

post-judgment interest; 

5. Appoints the National Futures Association (“NFA”) as Monitor in this matter; 

6. Orders that Highland is prohibited permanently from, directly or indirectly, 

engaging in trading on or subject to the rules of any registered entity (as that term 

is defined in Section 1a(40) of the Act, 7 U.S.C. § 1a(40)), after the date of entry 

of this Order, and all registered entities shall refuse it trading privileges; and 

7. Orders Respondents to comply with the conditions and undertakings consented to 

in Section VI of this Order. 

     Upon consideration, the Commission has determined to accept the Offer.

VI. ORDER 

Accordingly, IT IS HEREBY ORDERED THAT: 

A. Respondents shall cease and desist from violating Sections 4b(a)(1)(A) and 4o(1)(A) and 

(B) of the Act, 7 U.S.C. §§ 6b(a)(1)(A), 6o(1)(A), (B). 

B. Respondents shall pay, jointly and severally, restitution in the amount of one hundred 

seventy-six thousand, two hundred six dollars and fifty-four cents ($176,206.54) 

(“Restitution Obligation”). If the Restitution Obligation is not immediately paid in full, 

then post-judgment interest shall accrue on the unpaid portion of the Restitution 

Obligation beginning on the date of entry of this Order and shall be determined by using 

the Treasury Bill rate prevailing on the date of entry of this Order pursuant to 

28 U.S.C. § 1961. 
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To effect payment by Respondents and the distribution of restitution to Respondents’ 

Pool participants (hereinafter, “customers”), the Commission appoints NFA as 

“Monitor.” The Monitor shall receive payments of the Restitution Obligation and any 

post-judgment interest from Respondents and make distributions as set forth below. 

Because the Monitor is not being specially compensated for these services, and these 

services are outside the normal duties of the Monitor, it shall not be liable for any action 

or inaction arising from its appointment as Monitor other than actions involving fraud. 

Respondents shall make payments of the Restitution Obligation and any post-judgment 

interest under this Order in the name of the “Highland Settlement Fund” and shall send 

such payments by electronic funds transfer, or U.S. postal money order, certified check, 

bank cashier’s check, or bank money order to the Office of Administration, National 

Futures Association, 320 South Canal Street, 24th Floor, Chicago, IL 60606, under a 

cover letter that identifies the paying Respondent and the name and docket number of this 

proceeding. The paying Respondent shall simultaneously transmit copies of the cover 

letter and the form of payment to the Chief Financial Officer, Commodity Futures 

Trading Commission, Three Lafayette Centre, 1155 21st Street, NW, Washington, D.C. 

20581. 

The Monitor shall oversee Respondents’ Restitution Obligation and shall have the 

discretion to determine the manner of distribution of funds in an equitable fashion to the 

Respondents’ customers or may defer distribution until such time as the Monitor may 

deem appropriate. In the event that the amount of payments of the Restitution Obligation 

to the Monitor are of a de minimis nature such that the Monitor determines that the 

administrative cost of making a restitution distribution is impractical, the Monitor may, in 

its discretion, treat such restitution payments as civil monetary penalty payments, which 

the Monitor shall forward to the Commission, as discussed below. To the extent any 

funds accrue to the U.S. Treasury for satisfaction of Respondents’ Restitution Obligation, 

such funds shall be transferred to the Monitor for disbursement in accordance with the 

procedures set forth in this Order. 

C. Respondents shall pay, jointly and severally, a civil monetary penalty in the amount of 

three hundred thousand dollars ($300,000) (“CMP Obligation”). If the CMP Obligation 

is not paid immediately in full, then post-judgment interest shall accrue on the unpaid 

portion of the CMP Obligation beginning on the date of entry of this Order and shall be 

determined by using the Treasury Bill rate prevailing on the date of entry of this Order 

pursuant to 28 U.S.C. § 1961.

Respondents shall pay the CMP Obligation and any post-judgment interest by electronic 

funds transfer, U.S. postal money order, certified check, bank cashier’s check, or bank 

money order. If payment is to be made other than by electronic funds transfer, then the 

payment shall be made payable to the Commodity Futures Trading Commission and sent 

to the address below: 

 
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C/O ESC/AMK326 

Commodity Futures Trading Commission 

6500 S. MacArthur Blvd. 

HQ Room 266 

Oklahoma City, OK 73169 

(405) 954-6569 office 

(405) 954-1620 fax 

9-AMZ-AR-CFTC@faa.gov 

If payment is to be made by electronic funds transfer, Respondents shall contact 

Tonia King or her successor at the above address to receive payment instructions and 

shall fully comply with those instructions. Respondents shall accompany payment of the 

CMP Obligation with a cover letter that identifies the paying Respondent and the name 

and docket number of this proceeding. Respondents shall simultaneously transmit copies 

of the cover letter and the form of payment to: (i) the Chief Financial Officer, 

Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st Street, NW, 

Washington, D.C. 20581; and (ii) Charles Marvine, Deputy Director, Division of 

Enforcement, Commodity Futures Trading Commission, 2600 Grand Boulevard, 

Suite 210, Kansas City, Missouri 64108. 

D. Highland is permanently prohibited from, directly or indirectly, engaging in trading on or 

subject to the rules of any registered entity (as that term is defined in Section 1a(40) of 

the Act, 7 U.S.C. § 1a(40)), after the date of entry of this Order and all registered entities 

shall refuse it trading privileges. 

E. Respondents and their successors and assigns shall comply with the following conditions 

and undertakings set forth in the Offer: 

1. Public Statements: Respondents agree that neither they nor any of their successors 

and assigns, agents or employees under their authority or control shall take any 

action or make any public statement denying, directly or indirectly, any findings 

or conclusions in this Order or creating, or tending to create, the impression that 

this Order is without a factual basis; provided, however, that nothing in this 

provision shall affect Respondents’: (i) testimonial obligations; or (ii) right to 

take legal positions in other proceedings to which the Commission is not a party. 

Respondents and their successors and assigns shall comply with this agreement, 

and shall undertake all steps necessary to ensure that all of the agents and/or 

employees under their authority or control understand and comply with this 

agreement. 

2. Highland agrees that it shall never, directly or indirectly: 

a. enter into any transactions involving “commodity interests” (as that term 

is defined in Regulation 1.3, 17 C.F.R. § 1.3 (2022)), for its own account 

or for any account in which Highland has a direct or indirect interest; 
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b. have any commodity interests traded on Highland’s behalf; 

c. control or direct the trading for or on behalf of any other person or entity, 

whether by power of attorney or otherwise, in any account involving 

commodity interests; 

d. solicit, receive, or accept any funds from any person for the purpose of 

purchasing or selling any commodity interests; 

e. apply for registration or claim exemption from registration with the 

Commission in any capacity, and engage in any activity requiring such 

registration or exemption from registration with the Commission except as 

provided for in Regulation 4.14(a)(9), 17 C.F.R. § 4.14(a)(9) (2022); 

and/or 

f. act as a principal (as that term is defined in Regulation 3.1(a), 17 C.F.R. 

§ 3.1(a) (2022)), agent or any other officer or employee of any person (as 

that term is defined in Section 1a(38) of the Act, 7 U.S.C. § 1a(38)), 

registered, required to be registered, or exempted from registration with 

the Commission except as provided for in Regulation 4.14(a)(9). 

3. Zatorski agrees that he shall never, directly or indirectly: 

a. control or direct the trading for or on behalf of any other person or entity 

(other than for or on behalf of (i) his spouse, parent, child, grandparent, 

grandchild, brother, sister, uncle, aunt, nephew, niece, or in-law; (ii) an 

entity he wholly owns; or (iii) a proprietary trading firm which is made 

aware of this Order prior to Zatorski controlling or directing any trading 

for or on its behalf), whether by power of attorney or otherwise, in any 

account involving commodity interests; 

b. solicit, receive, or accept any funds from any person for the purpose of 

purchasing or selling any commodity interests; 

c. apply for registration or claim exemption from registration with the 

Commission in any capacity, and engage in any activity requiring such 

registration or exemption from registration with the Commission except as 

provided for in Regulation 4.14(a)(9); and/or 

d. act as a principal (as that term is defined in Regulation 3.1(a)), agent or 

any other officer or employee of any person (as that term is defined in 

Section 1a(38) of the Act), registered, required to be registered, or 

exempted from registration with the Commission except as provided for in 

Regulation 4.14(a)(9). 

4. Cooperation with Monitor: Respondents shall cooperate with the Monitor as 

appropriate to provide such information as the Monitor deems necessary and 

appropriate to identify Respondents’ customers, whom the Monitor, in its sole 
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discretion, may determine to include in any plan for distribution of any restitution 

payments. Respondents shall execute any documents necessary to release funds 

that they have in any repository, bank, investment or other financial institution, 

wherever located, in order to make partial or total payment toward the Restitution 

Obligation. 

5. Partial Satisfaction: Respondents understand and agree that any acceptance by

the Commission of any partial payment of Respondents’ Restitution Obligation or

CMP Obligation shall not be deemed a waiver of their obligation to make further

payments pursuant to this Order, or a waiver of the Commission’s right to seek to

compel payment of any remaining balance.

6. Change of Address/Phone: Until such time as Respondents satisfy in full their

Restitution Obligation and CMP Obligation as set forth in this Order,

Respondents shall provide written notice to the Commission by certified mail of

any change to their telephone numbers and mailing addresses within ten calendar

days of the change.

* * *

The provisions of this Order shall be effective as of this date. 

By the Commission. 

___________________________________ 

Robert N. Sidman 

Deputy Secretary of the Commission 

Commodity Futures Trading Commission

Dated: September 28, 2023