Toomre Capital Markets LLC

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Phillip Bennett

Austria Issues Arrest Warrants for Wolfgang Floettl and Phillip Bennett

After Bawag bank admitted late last week to concealing close to a billion dollars in trading losses, Austrian officials have issued arrest warrants on March 28, 2006 for Wolfgang Floettl (sometimes spelled as Wolfgang Flottl), the son of the former head of Bawag bank, and Phillip Bennett, the former CEO of U.S. futures dealer Refco. This BBC story has more details.

Toomre Capital Markets LLC has previously posted here that Mr. Floettl and his firm Ross Capital were rumored to be one of the 10 or so customers whose losses during the 1997 Asian financial crisis led to the bad debts that were concealed by Refco’s former chairman Phillip Bennett. With recent news that Wolfgang Floettl also incurred unreported losses at Bawag during the period of 1996-2000, one has to seriously question just how “arm’s length” all transactions between Refco and Bawag ever were subsequent to mid-year 1997. For instance, since Wolfgang Floettl was the son of the head of Bawag bank (widely known as “Mr. Bawag”) and he is rumored to have incurred serious losses that were concealed by both institutions, one might reasonably question why and at what price Bawag agreed to purchase 10% of Refco in 1999.

Was there some quid pro quo between Bawag and Refco that never was disclosed to third parties? A reasonable person might suspect that the answer to this question is a resounding yes. If so, then a social network analysis (“SNA”) might be particularly helpful to better understand the relationships between Refco, Bawag, Ross Capital, PlusFunds, Liberty Capital and other organizations tied to the Refco scandal. Perhaps given time constraints, TCM might be able to pull together the names of key individuals who could be included in such a SNA mapping exercise. If one is interested in the initial data for such a SNA mapping, please contact Toomre Capital Markets directly.