More corporate malfeasance out there. This looks like it will bankrupt the company as well. Here is what just happened:
In the latest development in the deepening crisis, Refco Securities LLC, a broker-dealer that accounts for more than half of Refco's gross revenues, said on Friday it was unwinding clients' and its own positions. The move signals the unit is essentially going out of business, making it the second Refco unit to stop operating this week.
On Thursday Refco Capital Markets, a prime broker that served the hedge fund community, halted activities and froze all its accounts, saying it did not have enough cash to go on.
Now this is some serious stuff I should think. This is all because CEO and chairman, Phillip Bennett used $430 million in bad debts to inflate the company's financial standing as it went public. He is probably going to go to jail as well. Too bad the stock has been halted because it would be interesting to see what the price would do. Someone sees some value in the company:
Man Group's brokerage unit, Man Financial, has expressed interest in buying Refco's futures business, according to a source familiar with the matter, who added private equity firms were also eyeing the embattled company.
I think they may want to get in there and grab all the traders in one fell swoop before the company seriously goes down the tubes. Well it looks like Refco is going to fall into the same garbage bin that has Enron and Global Crossing in it.
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