Griffin trader on fraud charge

Scott Szach, former chief financial officer at Griffin Trading Company (GTC), the Chicago-based futures firm that went bankrupt in 1998 was charged with criminal fraud in January. The US Attorney in Chicago filed a single count of felony wire fraud against him in a federal court. The prosecution alleges that Mr Szach made money transfers from the firm in order to finance unauthorised personal trading between August 1997 and December 1998. According to the charge, he ran up total losses of more than US$2 million after making covert 63 wire transfers of some US$5.56 million and that he sought to hide these movements by manipulating the firm’s records. Mr Szach faces a maximum five years imprisonment and a US$250,000 penalty. However the case will probably not go to trial since his attorney has indicated that Mr Szach will plead guilty to the wire fraud charge. The Commodity Futures Trading Commission (CFTC) which regulates the industry, has already settled with Mr Szach. In its order, the CFTC finds that he omitted and misclassified his trading losses in GTC’s books and that he signed and filed reports with the regulator which included the errors. It also found that he had used customer money from customer accounts to fund his trading. Mr Szach will pay US$220,000 over ten years and has agreed not to trade for the same period. He has also undertaken not to register with US futures regulators again.