Refco Owes Jim Rogers Fund $362 Million

Looks like a strong argument against the "self regulated" (read no regulation) model for hedge funds. I can see why people are worried about them.

If a fund takes down a clearing firm (or some embezzlement occurs) then customer funds on margin in the same pool are also at risk.

This makes things like IB's universal account more attractive for futures traders with large amounts of money on deposit.
 
Quote from SethArb:

-Rogers Raw Materials Fund - $287,436,182

-Rogers International Raw Materials - $75,213,814

www.bankrupt.com/refco.txt
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Thanks for the link. From that newsletter I also looked at the memorandum of understanding between Refco and JC Flowers.

I marvel at how beautifully the purchasing memorandum is done, the 2.8% breakup fee and the 20M overbid condition are clearly targeted at preventing any additional bidders. The fact that they did all of this in 2-3 days is simply beautiful, the Kirkland and Skadden lawyers earned their fees. Also, despite Sexton / Murphy's presence, Scott Schoen signed for both Refco and Refco Futures. So it is clear that TH Lee wants to get out of the Refco situation as quick as possible. I am betting that TH Lee rather lose the $450M he still has Refco than damaging his ability to raise the $7.5B new fund.
 
Quote from rufus_4000:

Thanks for the link. From that newsletter I also looked at the memorandum of understanding between Refco and JC Flowers.

I marvel at how beautifully the purchasing memorandum is done, the 2.8% breakup fee and the 20M overbid condition are clearly targeted at preventing any additional bidders. The fact that they did all of this in 2-3 days is simply beautiful, the Kirkland and Skadden lawyers earned their fees. Also, despite Sexton / Murphy's presence, Scott Schoen signed for both Refco and Refco Futures. So it is clear that TH Lee wants to get out of the Refco situation as quick as possible. I am betting that TH Lee rather lose the $450M he still has Refco than damaging his ability to raise the $7.5B new fund.
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Exactly!
And like I said earlier . . . this is gonna be a lay-up for Chris Flowers compared to the Long-Term Credit Bank of Japan Ltd.These guys really have their act together!
 
many thks for yr earlier response rufus_4000, yep, have client accts as well, not looking at credit wrap type structure presently, but yr response gives me some good pointers as to the possible purpose of some clauses i particularly dislike in my 'prime' 's draft contract... cheers!
 
I just heard from a 'decent' source of mine that Refco Capital Markets clients will be made whole. The assets and liabilities match up. Now, we will see soon enough. I don't know for sure if this is correct. But Refco Capital Markets is a separate entity and it was well run.
 
Quote from rufus_4000:

Maybe I am wrong, but the article is very clear about Beeland being a hedge fund, and use the unsecured prime brokerage services provided by Refco. By using Prime brokerage services such as risk based margin calculation, etc, by definition the Beeland account becomes unsecured.

Beeland accounts are not the same as Jim Roger's personal investment accounts, since hedge funds have extra financing needs, therefore have leverage that is greater than that available to an average investor.
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Exactly.
 
I found that breakup fee interesting. But probably just there to scare away bidders.

It has been years since I even thought about bankruptcy law. But, if trustee can go back and undue deals that have already been consumated. I suspect a trustee could disallow the break up fee if the asset went to a different bidder.
 
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