Refco Account Security

[MYDemaray]

Apex, the $430 was repaid by Bennet, but to do so, he used a entity controlled by himself to borrow from Refco. Ran that money through Liberty , to whom he gave a rate spread, and then repaid the money to Refco with money borrowed from Refco.

My thought is that he was attempting to wipe out a personal liability and create an additional liability in an entity where he could shield himself personally. Of course this is naive when it amounts to fraud. Additionally, the loan was collateralized with Refco stock -- whose value at this point is dubious.

So, in effect there is still a $430 MM outstanding -- it just rests with Bennett's entity and not himself.

Unfortunately, earlier in the week, this would have resulted in a simple 25% loss of market cap. Now that things are shut down indefinitely, it could mean the demise of the company as loans are called in, etc. This is the very type of self-reinforcing cycle that Soros talks about in the Alchemy of Finance. The greatest thing of value at Refco are the customers -- unfortunately with these suspensions etc, using Refco will be akin to flying Valujet after the Everglades crash -- if Refco even survives, it will probably be safer than ever before, but the bad taste in everyones mouth will make customers flee.

APPENDED: I am also reading that the amount owed by Bennett could be as much as $545

 

[zdreg]

Quote from Apex Capital:

I responded to JimRockford and JimRockford only.
If you are too lazy to read thru this person's posts and see the tone of their highly inflammatory and slanderous remarks that are not based nor substantiated in fact, than so be it.

You are not alone.
ET is full of people that are lazy and refuse to do their own DD.
Join the crowd.

if you cannot properly attribute your response, i suggest that you get yourself a personal editor to help you with your posts.

 

[fitrol]

Well it would appear that ET'ers are not the only ones panicking...Fimat (one of my executing brokers) will no longer take trades for give up to refco accounts!!!

I guess the rationale is they don't want to be stuck with nowhere to give the trades!!!

Peace & profit

 

[flytiger]

I think you need to rename this thread.

 

[MYDemaray]

Quote from fitrol:

Well it would appear that ET'ers are not the only ones panicking...Fimat (one of my executing brokers) will no longer take trades for give up to refco accounts!!!

I guess the rationale is they don't want to be stuck with nowhere to give the trades!!!

Peace & profit

Didn't a portion of Refco's regulated business halt as well? Perhaps that's why....

 

[jason_l]

Quote from Apex Capital:

What debt?
The $430 million dollar "receivable" was repaid, with interest.

Furthermore, I believe that the $430 million dollar "receivable" occured in the Refco Capital Markets side of Refco Holdings Inc., and not Refco LLC., which conducts futures transactions in segregated accounts.
The monies held in segregated accounts are monitored on a daily basis by the regulators.

repaid AFTER it was discovered, was it not? And did I not read somewhere this morning that there might be problems with that payment, as it was secured with refco stock?

You obviously really know your shit, and seem to enjoy the fact you are one of the few here who understand the structure of "Refco". I think most people group it all together, and probably rightly so since it seems niave to believe "refco" confined their criminal activity and financial chicanry to just a single entity.. I just read a rueters release that " The Refco Securities unit of Refco Inc. has told the Depository Trust Company that it is beginning to wind down its business".
A rat is rat, and whether or not people will lose money does not change the fact that these guys are common scum bags in nice suits.

 

[MYDemaray]

Quote from jason_l:

repaid AFTER it was discovered, was it not? And did I not read somewhere this morning that there might be problems with that payment, as it was secured with refco stock?

The way I see it (as mentioned above), the $430MM was never even really repaid -- it was simply shifted from Bennett to his entity. This time Bennett got caught.

An additional $430 of undisclosed debt is most likely an automatic violation of all their loan covenants and the right for the debtors to call their loans immediately -- which of course Refco does not have the liquidity to meet. Hence, we are now at this point.

 

[EqtTrdr]

Refco winds down its securities unit "...trouble at Refco, the country's largest independent futures broker, has spread beyond the unregulated unit the company shut Thursday..." http://www.businessweek.com/ap/financialnews/D8D7QGE80.htm?campaign_id=apn_home_down&chan=db



wooops... there goes your trading money$$



can you say Enron?

 

[Apex Capital]

Quote from jason_l:

You obviously really know your shit, and seem to enjoy the fact you are one of the few here who understand the structure of "Refco". I think most people group it all together, and probably rightly so since it seems niave to believe "refco" confined their criminal activity and financial chicanry to just a single entity.. I just read a rueters release that " The Refco Securities unit of Refco Inc. has told the Depository Trust Company that it is beginning to wind down its business".
A rat is rat, and whether or not people will lose money does not change the fact that these guys are common scum bags in nice suits.

First off, I am a registered CTA that has no other business relationship with REFCO aside from doing some clearing business with them in commodities, as I do with several other FCMs.

I have spent my last 30 or so posts speaking to the mechanics of having a segregated futures account at REFCO LLC., which has nothing to do with the REFCO SECURITIES unit that you speak of that is on the Capital Markets side of REFCO HOLDINGS INC., which is what the DTC directive applied to late last night.

A tremendous amount of people continue to fail to make this distinction, and have a total lack of understanding of how the CME and ECC plays into the handling of segregated futures accounts.

There are over 3,000 employees at REFCO.
I doubt that all of them are "common scumbugs in nice suits" as you say.

But hey, this is ET and it is full of people that spend 95% of their posts talking out of their ass.
Quite typical.

 

[nitro]

10:38 RFX Refco Securities confirms the initiation of unwinding proprietary and client positions (7.90 ) -Update-

Co announces that in light of recent developments, its regulated Broker Dealer, Refco Securities, has initiated the process of unwinding proprietary and client positions. At this time, Refco Securities will only be engaging in security transactions to the extent necessary to offset and effectively liquidate outstanding long and short customer and proprietary positions. Refco Securities is initiating this step to facilitate an orderly wind-down of positions. Refco Securities LLC is in compliance with its regulatory capital requirements. (Stock remains halted.)

nitro