The FSA said yesterday it has issued intervention orders against Griffin, the London-based offshoot of a well-known Chicago trading house, and a related firm GLH (Derivatives) Ltd, which acted as a corporate vehicle for a number of independent futures traders including Mr Park. It will now seek the orderly winddown of the two firms.
The Independent has learned that Mr Park, a wealthy Korean, known in the futures market by the nickname "Chinkie John",ran into difficulty last week when he lost pounds 6.25m on German government bond (Bund) futures after the market unexpectedly turned against him. He was unable to meet margin calls.
Mr Park, who is believed to be in his mid-20s, has been operating as an independent trader using Griffin's City premises since last March. He is said to be seeking to put his London house and his car up for sale to meet his obligations after being told by his father, a wealthy businessman, that he cannot access an $18m trust fund to repay his debts.
Mr Park was not returning phone calls yesterday. GLH has a telephone number listed with the FSA in Colchester, Essex, but the line has been disconnected.
Griffin was declared in default by the London International Financial Futures and Options Exchange (Liffe) on Christmas Eve after discovering it had insufficient funds to cover losses run up by Mr Park in dealings on the German futures exchange, the DTB. Griffin acted as a clearing house, or intermediary, for Mr Park. Normally he should have had enough money on deposit with the firm to cover potential losses.
Steve Rose, the managing director of Griffin in London, has told clients that Mr Park had pounds 1m on deposit with Griffin. One client said that according to Mr Rose, as of the evening of 21 December, Griffin was aware that Mr Park had a potentially loss-making position in German March Bund futures.
However, as far as the firm was aware Mr Park had bought only 950 "lots". Lots are the units in which the contracts are traditionally traded. Then at 10.30am on 22 December, Griffin was contacted by another broker, Tullet & Tokyo, which requested settlement for a further 8000 DTB futures lots held in Mr Park's name. Although Griffin could have seized the contracts and sold them in the market with a smaller loss, it did not. By late afternoon, the word was out that someone was in trouble, compounding its difficulty in disposing of the contracts.
Mr Rose said yesterday that he was unable to confirm or deny the account of the events which have led the firm into default. He referred all calls to the head office in Chicago. The firm's lawyers Mayer, Brown & Platt, were not available for comment.
The FSA said in a statement yesterday: "Both Griffin and GLH have been unable to meet substantial margin calls arising from GLH's trading. Accordingly GLH has failed to maintain adequate financial resources to meet its business commitments and to withstand the risks to which its business is subject: Griffin has failed to maintain sufficient funds in its segregated client bank accounts to meet its client money requirements."
Some 80 sole traders, known in the market as locals, who also used Griffin as a clearing house have been hit by the collapse.
They have been told by the SFA they are unlikely to get their money back in full, although they could get up to 90 per cent back. Matters have been complicated by the fact that MeesPierson, the Dutch bank that also acted as broker for some of Griffin's clients, is refusing to hand back pounds 2m it received from Griffin which traders claim was in a segregated account and is therefore theirs. MeesPierson said it was was unable to comment.Reuse content