Refco has been forced to close its Refco Capital Markets
division, initially for 15 days, in the wake of a scandal that
swept the company. The firm said the unit had "insufficient
liquidity to continue operations," while trading in the firm's
shares was halted for the second time in a week on the back of
Following an incredible week for Refco, in which the
brokerage's chief executive Phil Bennett was ousted, arrested
on securities fraud charges and forced to repay hundreds of
millions of dollars in debts owed to the firm, some industry
executives have seen further cracks that could ultimately lead
to the company's complete collapse.
Bennett was arrested on 12 October by the US attorney's
office, assisted by a number of federal agencies including
Commodity Futures Trading Commission and Securities and
Exchange Commission (SEC).
US attorney Michael Garcia told reporters at a press
conference that Bennett "hid from investors and regulators a
debt of hundreds of millions of dollars that one of Bennett's
companies owed to Refco". He added that the debt owed as of
late last year was as high as $540m.
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