Refco

The company has also been sued by Sedona in connection with this trading. At the time, the site had 12 milion registered users, which means that half of all people who have internet access in the UK are registered. The company had been implicated in "naked" short sales on the stock of a company called Sedona Corp., disclosed that it was negotiating the SEC and hoped to reach a settlement that would likely include an injunction against future violations and "payment of a substantial civil penalty." Refco put $5 million in reserve in anticipation of the settlement. On 6 December 2005 it was reported that ITV plc was buying Friends Reunited for a reported £120 million. On May 16, 2005, the company disclosed that it had received a "Wells Notice," indicating it might face charges related to improper short selling at its Refco Securities unit and other matters. Friends Reunited features prominently in Ben Elton's detective novel Past Mortem (2004). In 2001, the NFA ordered Refco to pay $43 million to 13 investors after their Refco broker used bogus order tickets to clear trades. Both services will allow matching from each others' databases in the near future, though this does not appear to functioning as of June 9, 2005.

The 1978 "cattle futures" trading scandal in which Hillary Clinton was allowed to trade large positions on inadequate capital, and possibly the allocation of profitable trading by others into her account, was played out in Refco accounts. In 2005, the similar web site SchoolFriends Australia & New Zealand changed its name to Friends Reunited, joining with the UK site. According to the Wall Street Journal, it was "among the most cited brokers in the business, according to data provided by the NFA.". Friends Reunited has been used by bitter partners to get revenge on those who have abandoned them² and users have even been sued for the comments that they have made on Friends Reunited about other people ³. The Commodity Futures Trading Commission and the National Futures Association took action against Refco and its units more than 100 times since the firm's founding. According to the Register, potential employers use entries there to identify weak points in job applicants ¹. Refco has not enjoyed a clean reputation with regulators. Friends Reunited has become popular enough that its uses have gone beyond the intentions of its designers.

He is currently under investigation by regulators who suspect he may have known something about Bennett's malfeasance. The site has also lent its name to various CDs specialising in popular music of the past (specifically the years 1970 to 1989.) It has branched out to include a dating service, a genealogy element, Genes Reunited which allows users to trace their family tree, and a recruitment service for users to find new jobs. It is unclear why the firm's Chief Financial Officer had not spotted the loan, but the firm's previous CFO, Robert Trosten, left Refco in October 2004 with a $45 million payout that was not disclosed in the firm's IPO prospectus. For an annual fee, users can send messages to other users. This left the position on the books for James to find. Registered users can search schools, universities, streets and various other places in order to locate old friends. Apparently, in the fiscal quarter before the story broke, Bennett failed to execute his temporary Liberty Strategies-hidden repayment of debt. Founded by Steve and Julie Pankhurst, Friends Reunited is a British web site that helps users get in contact with people from their past.

The apparent fraud was caught by Peter James, Refco's newly hired controller. Note 3: Friends Reunited user in libel payout, John Leyden, [The Register], 21 May 2002, verified 27 January 2005 from http://www.theregister.co.uk/2002/05/21/friends_reunited_user_in_libel/. The Austrian National Bank and Financial Market Authority are investigating Bawag's involvement with Refco. Note 2: Web hath no fury like a woman scorned, Amelia Hill, The Observer, 5 May 2002, verified 27 January 2005 from http://observer.guardian.co.uk/uk_news/story/0,6903,710179,00.html. The Refco stock that collateralized the loan is now worthless, and on November 16, Bawag joined the line of people suing Refco, demanding 350 million Euros plus punitive damages in compensation for the company's failure to disclose information that would have discouraged Bawag from lending the money to Bennett. Note 1: Friends Reunited gives third reference, Startups.co.uk (sic), The Register, 24 June 2003, verified 27 January 2005 from http://www.theregister.co.uk/2003/06/24/friends_reunited_gives_third_reference/. The loan was granted on October 10, and Bennett used it to pay off the hidden $430 million.

On October 5, before news of the hidden loan was made public, Phillip Bennett applied for a 350 million euro loan, to be collateralized with his shares in Refco. In 1999, Bawag purchased 10% of Refco in a private transaction, and had an outstanding loan of 75 million euros to Refco at the time the firm collapsed. Group, an Austrian bank that lent Bennett the money to repay Refco. Ross Capital is run by Wolfgang Flottl, whose father used to run Bawag P.S.K.

Ross Capital has also been named by the Wall Street Journal's anonymous sources as one of the firms with losses that somehow led to Bennett's $430 million debt. If Refco did suffer a loss, I am confident that it was quite minimal relative to the $460 million receivable said to have been a key link in the firm’s debacle, or to the actual sums that the principals and key players of the firm took out many years later." The story in the Journal implies that Refco settled Niederhoffer's debt for positions that were worth less than he owed them, or perhaps that they accrued trading losses unwinding those positions. I don't know how much money Refco received for these assets, or how it accounted for the transaction, or whether it ended up with a profit or loss. "Refco received considerable assets from us as part of our agreement.

"There were no debts, loans, or any other financial obligations left open between us," Niederhoffer said. 29, 1997, in the presence of two major law firms and under the close scrutiny of regulators. Niederhoffer said on his Web site in response to these news articles that Refco wanted to take over the assets in his accounts and assume all the liabilities in order to meet capital requirements, and that he and Refco signed a formal agreement to that effect on Oct. Though no detailed report on Bennett's transactions has been made public, anonymous sources cited by the Wall Street Journal and other publications have stated that the debt stemmed from losses in as many as 10 customer trading accounts, including that of Ross Capital, and the widely reported October 27, 1997, trading losses of hedge fund manager Victor Niederhoffer.

The hearing on Refco's request is scheduled for February 14. On January 25, 2006, Refco asked the bankruptcy court to approve appointment of Christie's auction house to sell Refco's prized art collection, which includes photographs by Charles Ray and Andy Warhol. The purchased Refco units will cease the use of the Refco name on Monday, November 28th. The company is an arm of the UK-based Man Group.

The company's bankruptcy auction of its commodities and futures business ended on November 10th, with the final purchaser being announced as Man Financial, a rival in the commodities and futures fields. Lee Partners, Grant Thornton, Credit Suisse First Boston, and Goldman Sachs. As of October 27, shareholders of Refco have filed class action lawsuits against Refco, Thomas H. Lee Partners, L.P., a highly regarded buyout fund, and the reputation of its managers has been similarly sullied.

Their largest private investor was Thomas H. Their auditors, Grant Thornton, and the investment banks that handled the IPO, Credit Suisse First Boston, Goldman Sachs, and Bank of America Corp., all supposedly completed due diligence on the company, and all missed the CEO's hiding $430 million in bad debts. Refco had sold shares to the public in a public offering only two months before revealing the apparent fraud. Though of much smaller size, the regulatory impact of the scandal will be larger than for probably any other corporate failure except for Enron.

However, the bankruptcy judge in charge of the case decided that the break-up fee was unjustified due to the other interested parties not demanding a similar fee, leading to the Flowers group withdrawing their bid. These offers were for a time rebuffed, as the Flowers-led group would receive a "break-up" fee if Refco were to sell itself to one of these other parties. However, other bidders have emerged, including Interactive Brokers and Dubai Investments, the investment division of the country of Dubai, who have offered to buy the entire company. LLC for about $768 million.

Flowers & Co. Refco also announced a tentative agreement to sell its regulated futures and commodities business, which isn't covered by the bankruptcy filing, to a group led by J.C. However, the company subsequently submitted a revised document, claiming it had $16.5 billion in assets and $16.8 billion in liabilities. At the time, it declared assets of around $49 billion, which would have made it the fourth largest bankruptcy filing in American history.

filed for chapter 11 for a number of its businesses, to seek protection from its creditors on Monday, October 17, 2005. Refco, Inc. Before the halt, the shares were trading for more than $28 per share, and as of October 19, they had dropped (on the pink sheets) to $0.80 per share. As of October 19, trading of Refco's shares has been halted on the New York Stock Exchange, which is moving to permanently delist the shares.

His lawyer has said that Bennett plans to fight the charges. mail, interstate commerce, and securities exchanges to lie to investors. Bennett was arrested and charged with one count of securities fraud for using U.S. This announcement triggered a number of investigations, and on October 12 Mr.

should no longer be relied upon.". LLC and Refco Finance Inc. 28, 2005, and May 31, 2005, taken as a whole, for each of Refco Inc., Refco Group Ltd. 28, 2004, Feb.

28, 2003, Feb. 28, 2002, Feb. As a result, Refco said, "its financial statements, as of, and for the periods ended, Feb. The law requires that such financial connections between corporation and its own top officers be shown as what is known as a related-party transaction in various financial statements.

On October 20, they announced plans to sue Refco. Bennett secretly controlled. It is not yet clear if Liberty knew it was hiding sham transactions; management of the fund has claimed that they believed it was borrowing from one Refco subsidiary and lending to another Refco sub, and not lending to an entity that Mr. Bennett's company then paid the money back to Refco, leaving Liberty as the apparent borrower when financial statements were prepared.

He arranged at the end of every quarter for a Refco subsidiary to lend money to a hedge fund called Liberty Corner Capital Strategy, which then lent the money to Refco Group Holdings. Apparently, Bennett had been buying bad debts from Refco in order to prevent the company from needing to write them off, and was paying for the bad loans with money borrowed by Refco itself. Bennett, in the amount of approximately US$430 million. Refco said that through an internal review over the preceding weekend it discovered a receivable owed to the company by an unnamed entity that turned out to be controlled by Mr.

Bennett had hidden $430 million in bad debts from the company's auditors and investors, and had agreed to take a leave of absence. entered crisis on Monday, October 10, 2005 when it announced that its chief executive officer and chairman, Phillip R. Refco, Inc. .

Investors had been pleased to buy shares because of Refco's history of profit growth -- they had reported 33% average annual gains in earnings over the four years before their initial public offering. It closed the day over 25% higher than that, valuing the entire company at about $3.5 billion. Refco became a public company on August 11, 2005 with the sale of $26.5 million shares to the public at $22. Though these filings have since been disowned by the company, they are probably roughly accurate in showing the firm's level of leverage.

The firm's balance sheet at the time of the collapse showed about $75 billion in assets and a roughly equal amount in liabilities. Friedman and Co." Prior to its collapse in October, 2005, the firm had over $4 billion in approximately 200,000 customer accounts, and it was the largest broker on the Chicago Mercantile Exchange. It was founded in 1969 as "Ray E. Refco (OTCBB: RFXCQ) is a New York-based financial services company, primarily known as a broker of commodities and futures contracts.