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Capt_Nemo

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Capt_Nemo

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Saturday, 10/15/2005 9:17:33 AM

Saturday, October 15, 2005 9:17:33 AM

Post# of 7479
Refco unwinding broker-dealer trades
SEC bars company from withdrawing capital for 20 days
By Alistair Barr & Robert Schroeder, MarketWatch
Last Update: 8:10 PM ET Oct. 14, 2005
http://www.marketwatch.com/news/story.asp?guid=%7BBB74125E%2DE68D%2D4DDC%2D8F85%2DCF41BA5DF9B8%7D&am...

SAN FRANCISCO (MarketWatch) -- Refco Inc. said on Friday that it's unwinding trades at its broker-dealer unit, a day after the commodities and financial-markets broker shut its capital-markets unit in the midst of a scandal.



Refco Securities LLC, registered as a broker-dealer with the Securities and Exchange Commission, has started unwinding proprietary and client positions and will only execute transactions to offset and liquidate those trades, New York-based Refco (RFX:
refco inc com said in a statement.

Refco Securities "is initiating this step to facilitate an orderly wind-down of positions," Refco said, adding that Refco Securities is in compliance with regulatory capital requirements.

The Wall Street Journal reported late Friday that senior regulators at the Chicago Mercantile Exchange (CME:
chicago mercantile hldgs inc cl a

8:05pm 10/14/2005


FinancialsMore GSGS114.55, +1.37, +1.2%) and other banks to buy Refco to calm fears among investors, lenders and trading partners who have become increasingly concerned about the future of the company.

CFTC spokesman David Gary said the agency hasn't asked Goldman or any other firm to intervene to save Refco.

Goldman, which was appointed as Refco's advisor this week, isn't interested, the newspaper added, citing a person familiar with the company's thinking.

Spokespeople at the CME and Goldman declined to comment.

Refco, the largest independent futures intermediary in the U.S., has been rocked this week by a scandal that allegedly involves its chief executive and at least $430 in hidden debt he may have owed the company, touching off a plunge in Refco's shares less than two months after their initial public offering.

Refco said on Monday it had suspended Phillip Bennett as CEO and added that he had repaid the company $430 million.

Bennett was arrested late Tuesday and charged Wednesday with securities fraud related to Refco's Aug. 22 IPO by the U.S. Attorney for the Southern District of New York in Manhattan. See full story.

On Thursday, Refco said it was shutting Refco Capital Markets for 15 days. Some analysts speculated that the division, which handles foreign-exchange and fixed-income over-the-counter transactions and offers prime brokerage, trading and stock-lending services, was losing customers. See full story.

SEC bars withdrawals

Also Friday, regulators took additional actions in response to Refco's troubles.

The SEC barred the company from withdrawing equity capital for 20 business days and restricted it from making unsecured loans or advances to stockholders and affiliates if those loans exceed 30% of the firm's excess net capital.

The order applies to both Refco Securities and Refco Clearing LLC, the SEC added.

Meanwhile, the Depository Trust & Clearing Corporation, the largest clearing and settlement organization in the world, said that Refco's currently in full compliance with the membership requirements of all its subsidiaries but that it only remains in business for the purpose of winding down outstanding positions.

Trading of Refco shares was halted for a second day on Friday.


Alistair Barr is a reporter for MarketWatch in San Francisco.
Robert Schroeder is a reporter for MarketWatch in Washington.


Report scum err scams here #board-610

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