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In Re: Griffin Trading Company,

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ARGUED SEPTEMBER 16, 2011

Before EASTERBROOK, Chief Judge, and WOOD and TINDER, Circuit Judges.

Griffin Trading Company, a futures commission merchant, went bankrupt in 1998 after one of its customers, John Ho Park, sustained trading losses of several million dollars and neither Park nor Griffin Trading had enough capital to cover these obligations. This case turns on whether Farrel Griffin and Roger Griffin (whose first names we use for clarity), the partners in control of Griffin Trading, breached their fiduciary duties when they allowed segregated customer funds to be used to help cover Park’s (and thus Griffin Trading’s) losses. In deciding this question, the district and bankruptcy courts applied Illinois’s version of the Uniform Commercial Code (U.C.C.) to a series of transactions that was initiated by the margin call that spelled Griffin Trading’s downfall. They erred in doing so. We can find no reason why the transactions at is- sue–which involved banks in England, Canada, France, and Germany, but notably not Illinois–would be governed by Illinois law. This error, however, does not stand in the way of our resolution of the appeal. We find that the bankruptcy court’s first decision in this case appropriately relied on Farrel’s and Roger’s own admissions that they failed in their obligation to protect customer funds. This admission was enough to hold them liable for the entire value of the wire trans- fer. Accordingly, we reverse the district court’s most recent decision in this case and remand for further pro- ceedings.

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