Former Refco CEO Phillip Bennett was last week indicted by a US grand jury on eight counts of conspiracy, fraud and other charges. If convicted, he faces up to 75 years in jail.
Prosecutors allege in the indictment that Bennett, perhaps with others, hid losses from Refco's auditors and investors from as long ago as the late 1990s. Bennett's lawyer said that his client welcomed 'the opportunity to face these charges and clear his good name'. Prosecutors want Bennett to forfeit $700m which they say he netted because of his alleged fraudulent activity.
In the meantime, hedge fund Man Group won last week's auction to buy the assets of Refco Inc, Refco's futures broking arm. A US bankruptcy court approved the $323m deal late Thursday. Refco also agreed to enter into a sale agreement with Forex Capital Markets LLC to sell its unregulated currency-trading accounts for $110m. The agreement is thought likely to flush out other bidders for this unit. After these disposals, Refco will still be left with around 20 affiliate businesses.
Finally, Bank of America, CSFB and Goldman Sachs, the three main underwriters for Refco's IPO earlier this year, are said to have been subpoenaed by US regulators in connection with the investigation into the collapse of the business.