The late Karsten "Cash" Mahlmann was a Chicago futures trader, broker, executive and former chairman who resigned from the Chicago Board of Trade due to the failure of his firm, Stotler & Company.
During Mahlmann's tenure as CBOT chairman the exchange was rocked by the Ferruzzi Finanziaria affair in July 1989 and the FBI undercover investigation, news of which broke in January of 1989. In August of 1989 22 CBOT traders were indicted. He was also CBOT chairman during the 1987 stock market crash.
Mahlmann was the son of a German grain importer. In 1957, he boarded a grain freighter and landed at Port Arthur, Texas. At the age of 20 years old, Mahlmann headed directly to Chicago, where he worked as a runner for Daniel Rice & Company, Inc.
Later, an early back-office positions was a job in the cash grain department at Shearson Hayden, where he earned the nickname "Cash."
In 1963, Mahlmann joined the exchange and 20 years later would join the CBOT's board of directors.
He had joined Stotler & Company, which was formed in 1962, and ended up as its chairman. Stotler saw its customer-segregated commodity funds increased from $965,000 in 1968 to almost $300 million in 1990, during Mahlmann's tenure at the firm.
A few days before Mahlmann would start his third term as CBOT chairman, the FBI investigation of the CBOT was announced.
In spring of 1990, the U.S. Securities and Exchange Commission discovered $13 million in assets and liabilities identified on the books of the parent group that should have been on the brokerage subsidiary's books. Additionally, the CFTC brought charges against Stotler, noting it misused $5.5 million of funds invested in its pools. Two Stotler commodity funds filed for liquidation under Chapter 7 of the Federal Bankruptcy Act.
Mahlmann suffered significant losses with Stotler's demise, and he held 220,000 share of the first publicly traded commodities clearing firm.
He had won the 1990 election, his fourth term, to be chairman by a vote of 634-to-528, beating former CBOT Chairman Leslie Rosenthal. However, but resigned on August 1 and from Stotler in September. On August 29, 1990, Mahlmann would declare personal bankruptcy as a result of all the lawsuits against him due to Stotler's bankruptcy.
Before his resignation from the CBOT, Mahlmann had sent the CBOT members an emotional letter in which he claimed a lack of involvement in Stotler`s day-to-day affairs since mid-1988.
In 1994, Mahlmann was hired as the CEO of Quantum Financial, Inc. and returned to Chicago to apply for membership in the CBOT, but he withdrew the application after it was denied.
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