Hedge Fund Reader : Hedge Funds operations stalled due to Refco’s illness

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October 17, 2005

Hedge Funds operations stalled due to Refco’s illness

Refco’s current instability could spell dooms day for the hedge funds in executing trades through the trade futures giant. A substantial portion of revenues of Refco are earned through the trade execution of securities and commodities are executed through Refco Capital. The news of the halt Refco Securities – group’s bread winning business, was leaked out from Refco's clearing bank, Depositary Trust Company, which stated that it is winding down its business. Following on the embattled group has begun winding down Refco Securities, a regulated brokerage which accounts for more than half of the group's gross revenues. In order to safeguard its interests, they have sent its CEO, Mr. Phillip Bennett, on paid vacation to search for audit trails, and frozen customer accounts for 15 days in another US subsidiary, Refco Capital Markets. Refco Securities is being closely monitored by the Securities and Exchange Commission (SEC) and the Financial Services Authority (FSA) for the company’s actions. Former SEC Chairman, Mr. Arthur Levitt will act as an adviser to help stabilise Refco, while, Goldman Sachs will assist on the rescue mission on an advisory basis. Black Enterprise.com Reports:

Refco Securities is regulated by US financial watchdog the Securities and Exchange Commission. It said today that the unit could not withdraw equity capital for 20 days. The aim is to try to protect money held by Refco from leaking out to any company investors or employees.

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October 17, 2005 in Gossip & Scandal, Regulation, Strategy | Permalink