Toomre Capital Markets LLC

Real-Time Capital Markets -- Analytics, Visualization, Event Processing, and Intelligence

More Refco Developments

This entry is a follow-up to Saturday's post entitled "Refco: No longer a question of if, but when for bankruptcy filing".

The Times Online reports here that "Refco debt inquiry is widened to other staff". The story states that the company-appointed investigators believe that other Refco staff knew about Mr Bennett’s company, where the debts were concealed. The investigators now want to know if those same people knew what the company was being used for.

BusinessWeek has posted this story entitled "The Family Man Behind Refco's Woes" which is written by Mark Morrison who knew Phil Bennett as a father, soccer coach, and witty sophisticate who won the trust of financial pros. The author asks "So who is this ousted CEO charged with fraud?"

The Guardian has a story entitled "Crisis-hit US futures broker moves closer to breakup" that summarizes well the current status of the Refco story.

According to this article from TheStreet.com, Kevin Marino, the attorney for Liberty Corner Capital Strategies, the New Jersey hedge fund that was involved in the questionable transactions with Refco, says lawyers with Mayer, Brown, Rowe & Maw drafted some of the loan documents. Marino claims that Mayer Brown's involvement in the deal is one reason officials with Liberty Corner never questioned the legitimacy of the loans, which federal prosecutors say were used by former Refco CEO Phillip Bennett to conceal a $430 million accounting fraud from the company. According to a Mayer Brown spokeswoman, Sheila Turner, "Based on our investigation to date, it appears that lawyers in our firm from time to time documented loans for Refco, and some of these loans appear to have been loans involving Liberty Corner Capital that have now been called into question," Turner said. "At this point in time, we are unable to provide further information." If Mayer Brown played an active role in the creation of legal documents for the loans between Bennett and Liberty Corner, it certainly would lend credibility to the legitimacy of the fraudulent transactions, especially since Mayer Brown is one of the largest and well respected corporate law firms practicing securities law.