Refco Account Security

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It's a bd. What kind of receivables would they have. If you look at Lehman/enwv/Wood River, they sold the long for a quick, although substantial loss. By the way, ENWV is on the SHO list.

In the case of Refco, my bet is they passed the hot potatoe hoping for more and more of the shorts to be deregistered by the SEC for non filing.

SDNA was one of 60 companies profiled in the Daily Deal in Sept 01 as "financed" by LTS. THe goal is, take them to zero. WHen they don't work, the Hedgies walk, and leave the garbage. We'll find out very, very soon. But don't bet against it. tThat 430mm could be a billion very quickly. This is pretty elaborate, and probable for a reason.

I hate to see anybody of consequence get hurt, but this is, and has been, out of control for too long.
 
Quote from synchro:

Latest news is that a hedge fund helped the refco ex-ceo hid the receivables. This is looking juicier and juicier.
More...

RFX will get its assets sued off by ppl accusing them of deception on the ipo offering.


imho
 
Quote from synchro:

Latest news is that a hedge fund helped the refco ex-ceo hid the receivables. This is looking juicier and juicier.
More...

Here is the news article:

http://www.marketwatch.com/news/yho...o&guid={DF01D229-7FD8-4297-9DD8-DDEBAAC81CEA}

Quote, " ... Liberty Corner Capital was paid for telling Refco's auditors that it owed the debts even though Bennett's companies owed the money, "

This is bad, this is conspiracy, this is out right fraud (the previous press release made it look like that the related party issue was just not disclosed). In another thread, I have predicted $8 bottom on Monday (I used Tyco and MCI as precedents), while I stand by my prediction, this is the first piece of news that make me quiver.

I believe that soon arrest warrants will be issues, probably more than one (Bennett, Maggio, maybe 1-2 more).
 
down 12.27% today already, min 12% a day return shorting over the last 3 days, now that's a return on investment, not that I shorted it, just looks good in hindsight obviously:p
 
I just had a scary thought, what if the $430M receivable is not from a client, but rather from an internally controlled account, a secret proprietary trading operation, that actually lost the money trading. So Bennett and Maggio (who was reported involved) conspired to hide the trading losses as a client-receivable, and paid a hedge fund to lie to auditors that it is their losses, then shuffle the losses to a third party to appear as an asset.

One thing that bugged about the whole sequence of events was why Bennett repaid the receivable in full with cash on Monday. The obvious answer is that he wanted to buy his way out of the problem. It has since come out that he pledged his own equities in Refco to obtain a bank loan to repaid the receivable in full. Of course, it is possible that he is repaying uncollectable client debt, but back in the mind I question this logic. And then it just dawn on me, it could have been *Refco's* trading losses that he is trying to cover up.

If this is the case, it is still a theory by me at this moment, then Refco is truly done. Bennett can surrender all of his equity in Refco (38%) to SEC today, it still won't get him of the problem.

Rufus
 
Refco is known for standing by clients when they have positions that go against them temporaily. My guess is that it is some cutomer's loss from the 98 volatility. They had significant regulatory issues at the time so maybe they wanted to hide the fact they let a cucstomer lose so much without closing out his positions. Idoubt it was from a house position.
 
The more I think about my theory, the more it makese sense. Naturally, after more than 12 years on the street, I have become a fan of conspiracy theories since I have seen what people are willing to do for a little gain. Here is my conspiracy theory of the day on Refco.

'98 was a tough year for trading in general with all the financial blow-ups. So it is entirely conceivable that Refco (controlled by Bennett) lost the money trading. Considering that Refco only have >$600M operating cash today, it is likely that Refco would have <$430M back in '98. Bennett would be keenly aware (as the former CFO) that if the losses was reflected on the income statement, then Refco would have to borrow substantially just to keep the operations running. Therefore in '98, Refco is technically insolvent (aka bankrupt) as a company, so Bennett and Maggio (maybe others) conspired to cover up the losses as a "customer" loss, an uncollectible one at that.

Joe Murphy joined in '99 (after '98), so he won't know anything about the cover-up. Sexton was running technology back then, so he probably won't know anything about the account shuffle.

This is very scary if my conspiracy theory has some shred of truth. I need to get some old-war-stories (from ex-Refco and a few current Refco people), doing that now.

Rufus
 
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