Toomre Capital Markets LLC

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

PlusFunds tied to Refco and Bawag??

Greg Newton on his blog NakedShorts has been following the on-going developments with a money manger called PlusFunds that had a significant portion of its assets held by Refco Capital Markets, the unregulated Refco subsidiary based in Bermuda, until just before Refco’s bankruptcy filing. Apparently, the then CEO of PlusFunds, one Christopher Sugrue, a New York money manager and past employee of Refco, showed up at Refco’s offices just after the loan to Refco’s then CEO Phillip Bennett was announced and demanded that his company’s assets be transferred immediately to on-shore segregated accounts. The creditor committee of Refco subsequently got these funds to be frozen which in turn led to significant redemptions from PlusFunds’ investors and the filing for bankruptcy protection by PlusFunds earlier this month.

The Wall Street Journal has more information on a SEC investigation of PlusFunds’ dealings with Refco here. The article notes that Mr. Sugrue “was a senior executive at Refco for more than five years, according to a biography in court papers. In addition to working with hedge funds on the firm's behalf, Mr. Sugrue helped negotiate the sale of 10% in Refco to Austrian bank Bawag P.S.K. in 1999.”

Toomre Capital Markets LLC is curious about with whom at Bawag Mr. Sugure was negotiating. As noted in an earlier post here, news has recently emerged of hidden losses at Bawag incurred during the late 1990’s period and that executives up to and including the chairman were involved in the concealment. Was Mr. Sugure’s negotiating partner perhaps a certain Thomas Hackl, who at the time apparently was the head of Bawag’s Treasury department? Greg Newton mentions Mr. Hackl at the end of his PlusFunds post and this rumor mill page has other unsubstantiated information on Mr. Hackl.

All of this is very curious. The PlusFunds, Refco and Bawag seem to be much more intertwined than first appearances. It appears likely that the public will be learning more about the interrelationships between these three organizations and key individuals in the coming days.