Post by Deleted on Oct 10, 2005 16:41:39 GMT -6
Coincidence??
today.reuters.com/business/newsArticle.aspx?type=ousiv&storyID=2005-10-10T223639Z_01_BAU046248_RTRIDST_0_BUSINESSPRO-FINANCIAL-REFCO-DC.XML
tiny url: tinyurl.com/b5aco
NEW YORK (Reuters) - Refco Inc.'s (RFX.N: Quote, Profile, Research) shares sank 45 percent on Monday after the commodities broker put its chief executive on leave and launched an investigation into $430 million it was owed by an entity he controlled.
The company, which went public in August and is one of the world's largest and most powerful commodities and futures dealers, also said it would probably delay filing its 10-Q quarterly financial statement with securities regulators for the quarter ended August 31. Company shares lost $1.65 billion of market value on Monday.
Refco said it asked CEO Phillip Bennett, who is also chairman, to take a leave of absence after discovering the receivable of about $430 million. The money was repaid with interest by Bennett on Monday. A lawyer representing Bennett did not return a call for comment.
Santo Maggio, president and chief executive of Refco Securities LLC and Refco Capital Markets, Ltd., was also asked to take a leave of absence. Thomas H. Lee Partners' Co-President Scott Schoen, whose private equity firm owns about 39 percent of Refco's shares, said Maggio was also found to have "some level of knowledge" of the receivable.
Refco has hired independent counsel and forensic auditors to help its board investigate issues related to Bennett. At the same time, Schoen was named chairman of a newly formed Board of Directors executive committee.
The company said in a memo to employees that it had "ample liquidity" to carry on with its business and that it did not expect any impact on day-to-day operations from the internal review.
The review thus far has shown Bennett, without telling the company, gained control of the $430 million receivable it had considered possibly uncollectable. Details of the review have been reported to all relevant regulators, the company said.
Had Bennett disclosed his control of the receivable, the company's financial statements would have reflected that.
But given the way the debt was accounted for, Refco said it determined that financial statements for 2002, 2003, 2004 and 2005 are not reliable. The financials will likely be restated, said Banc of America Securities analyst Michael Hecht in a research note.
"Given the company's prior accounting and regulatory issues, this is likely to have a meaningful negative impact on the stock today," Hecht added.
"BULLET PROOF"
Bennett took over running Refco in 1998.
At the time Refco's then-chairman Thomas Dittmer described Bennett as having a "bullet proof" track record of sound decision making and a "recognized financial stature."
He had joined Refco in 1981 from Chase Manhattan Bank, where he worked in credit and commercial lending. By 1983, he was chief financial officer at Refco.
Refco has wrestled with regulatory issues in the past. In mid-May, the Securities and Exchange Commission told the broker it was likely to recommend civil action against the company following a probe of short sales of stock by the company.
The broker said it cannot estimate when its 10-Q filing will be made or when the audit committee will finish its investigation.
William Sexton, who recently announced his resignation as Refco's chief operating officer, will instead remain with the company and has been appointed CEO. Joseph Murphy, CEO of Refco Global Futures and President of Refco LLC was named President of Refco Inc. and Refco Capital Markets.
Refco said it believes all customer funds on deposit are unaffected by the issues surrounding the receivable.
Refco, shares of which rose 25 percent in their August market debut, has operations in 14 countries and a large global derivative clearing operation.
It is among the most active futures brokers on exchanges in Chicago, New York, London and Singapore and a player in cash foreign exchange, international equities and debt markets.
The company's shares closed down $12.96, to $15.60 in trading on the New York Stock Exchange.
(Additional reporting by Dan Wilchins)
today.reuters.com/business/newsArticle.aspx?type=ousiv&storyID=2005-10-10T223639Z_01_BAU046248_RTRIDST_0_BUSINESSPRO-FINANCIAL-REFCO-DC.XML
tiny url: tinyurl.com/b5aco
NEW YORK (Reuters) - Refco Inc.'s (RFX.N: Quote, Profile, Research) shares sank 45 percent on Monday after the commodities broker put its chief executive on leave and launched an investigation into $430 million it was owed by an entity he controlled.
The company, which went public in August and is one of the world's largest and most powerful commodities and futures dealers, also said it would probably delay filing its 10-Q quarterly financial statement with securities regulators for the quarter ended August 31. Company shares lost $1.65 billion of market value on Monday.
Refco said it asked CEO Phillip Bennett, who is also chairman, to take a leave of absence after discovering the receivable of about $430 million. The money was repaid with interest by Bennett on Monday. A lawyer representing Bennett did not return a call for comment.
Santo Maggio, president and chief executive of Refco Securities LLC and Refco Capital Markets, Ltd., was also asked to take a leave of absence. Thomas H. Lee Partners' Co-President Scott Schoen, whose private equity firm owns about 39 percent of Refco's shares, said Maggio was also found to have "some level of knowledge" of the receivable.
Refco has hired independent counsel and forensic auditors to help its board investigate issues related to Bennett. At the same time, Schoen was named chairman of a newly formed Board of Directors executive committee.
The company said in a memo to employees that it had "ample liquidity" to carry on with its business and that it did not expect any impact on day-to-day operations from the internal review.
The review thus far has shown Bennett, without telling the company, gained control of the $430 million receivable it had considered possibly uncollectable. Details of the review have been reported to all relevant regulators, the company said.
Had Bennett disclosed his control of the receivable, the company's financial statements would have reflected that.
But given the way the debt was accounted for, Refco said it determined that financial statements for 2002, 2003, 2004 and 2005 are not reliable. The financials will likely be restated, said Banc of America Securities analyst Michael Hecht in a research note.
"Given the company's prior accounting and regulatory issues, this is likely to have a meaningful negative impact on the stock today," Hecht added.
"BULLET PROOF"
Bennett took over running Refco in 1998.
At the time Refco's then-chairman Thomas Dittmer described Bennett as having a "bullet proof" track record of sound decision making and a "recognized financial stature."
He had joined Refco in 1981 from Chase Manhattan Bank, where he worked in credit and commercial lending. By 1983, he was chief financial officer at Refco.
Refco has wrestled with regulatory issues in the past. In mid-May, the Securities and Exchange Commission told the broker it was likely to recommend civil action against the company following a probe of short sales of stock by the company.
The broker said it cannot estimate when its 10-Q filing will be made or when the audit committee will finish its investigation.
William Sexton, who recently announced his resignation as Refco's chief operating officer, will instead remain with the company and has been appointed CEO. Joseph Murphy, CEO of Refco Global Futures and President of Refco LLC was named President of Refco Inc. and Refco Capital Markets.
Refco said it believes all customer funds on deposit are unaffected by the issues surrounding the receivable.
Refco, shares of which rose 25 percent in their August market debut, has operations in 14 countries and a large global derivative clearing operation.
It is among the most active futures brokers on exchanges in Chicago, New York, London and Singapore and a player in cash foreign exchange, international equities and debt markets.
The company's shares closed down $12.96, to $15.60 in trading on the New York Stock Exchange.
(Additional reporting by Dan Wilchins)
