Quote from jimrockford:
Your comparison makes no sense.
The $400M loss, about a quarter of Refco's market cap, which triggered Refco's collapse, was caused by Refco's lack of risk control, and then fraudulently concealed by years of Refco's accounting manipulations and bogus transactions. Refco's CEO Bennett never covered the loss until after he was caught concealing it. Bennett obtained the funds, used in order to cover Refco's loss, by engaging in yet another questionable transaction of selling his personally owned Refco shares to an Austrian bank at which Refco had had relationships with insiders, days before those shares became worthless upon public disclosure of Refco's loss. This subsequently triggered an investigation by Austrian banking authorities, who were not happy to see the Austrian banking system left holding the bag.
IB has the strongest possible risk controls, the opposite of Refco. IB's loss was caused by wrongdoing outside of IB, not inside as with Refco. IB, unlike Refco, never concealed the loss. IB's loss was a few percent of its market cap, unlike Refco's loss, which was about a quarter of its market cap. IB's chairman covered IB's loss from his own personal fortune, earned through his legitimate achievements in creating and running IB as a legitimate company, instead of by looting a bank to cover the losses of a crooked company.
It just doesn't make any sense to compare the two companies. Bottom line: Refco's corruption doomed it to collapse, while IB is an honest, legitimate, successful company.
Disclosure:
I have never held any IB stock. I am an IB customer, who is concerned that false attacks on IB's reputation might interfere with the opportunities which IB provides to its customers.
My answer does in deed make sense. You need to relax and read what I said / wrote versus what you are thinking I am saying.
You have information of refco but not the discernment of the information as you are not totally correct.
My answer was in response to old trader stating no ceo or officer from refco every put in funds.
Refco was profitable and had been making money for years and the 500 million had been on the books for years while refco's day to day business carried on. I would summize that part of the blame has to go to the underwriters and their dd.
regardless, when Bennett went to the bank it was done in good faith to rectify the situation. Obviously no one knew refco was going to collapse otherwise the bank would of not given Bennett funds for the stock that at the time was part of his personal wealth portfolio. So it was done in good faith?
I am not saying nor did I say that IB was refco. I even stated that but did say that IB imo would have additional issues now that there is the possibility of litigation and there was a similarity versus price when the issues occurred which is factual.
I am an IB customer and also hold no stock. I do not want and hope IB can settle the dust as quickly as possible.
In closing, you state IB has the strongest possible risk controls etc. You and I only know what we are told and that is one's perception of the information.
IB's loss being caused by wrong doing outside of its control and manipulation? again is perception of IB's, the SEC, etc compliance and protocol but we will in time get the answers to those as we don't have enough information at this time to state that statement accurately.
Even based upon your own statement that refco's debt was 25percent of its cap doesn't explain why refco is worth 12 cents as we speak as we have seen many corporations retrace and not go bust as refco.
Refco's directors,staff, accountants may or may not have committed frauds but you tell me what stock listed on the nasdaq or nyse exchange has and does not? That includes banks and brokers? We as traders get interventions and frauds committed on us daily, par for the course.
again, I do not hold IB stock and hope this issue dies quickly.
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