NEW YORK, Oct. 12, 2005 (PRIMEZONE) -- Wechsler Harwood LLP today announced that it has filed a Federal Securities fraud class action suit on behalf of all other persons or entities who purchased or otherwise acquired Refco, Inc. ("Refco" or the "Company") (NYSE:RFX) common stock pursuant or traceable to the Company's Initial Public Offering ("IPO") on August 11, 2005, and on behalf of all other persons or entities who purchased or otherwise acquired Refco common stock between August 11, 2005 and October 10, 2005, both dates inclusive (the "Class Period").
The action entitled, FrontPoint Financial Services Fund, LP. v. Refco, Inc., et al., Case No. 05-Civ-8663 (DC)(RHM), is pending in the United States District Court for the Southern District of New York seeks to pursue remedies under both the Securities Act of 1933 (the "Securities Act") and the Securities Exchange Act of 1934 (the "Exchange Act") and names as defendants, the Company, certain of its senior officers and directors, as well as its commercial/investment bankers/underwriters involved with the Company's IPO. A copy of the complaint can be obtained from the Court or can be viewed on Wechsler Harwood web site at: www.whesq.com.
The Complaint alleges Refco violated federal securities laws by issuing a series of materially false and misleading statements in the Registration Statement (the "Registration Statement") and Prospectus (the "Prospectus") prepared and disseminated by defendants in connection with the IPO. In the IPO, 26.5 million shares of Refco's common stock were sold to the public, thereby raising approximately $583 million. Refco has now admitted that those financial statements should no longer be relied upon and will likely be restated. In a section entitled "Certain Relationships And Related Transactions," the Prospectus purported to detail all of the related party transactions concerning its business. The Prospectus, however, failed to disclose the related-party loan of $430 million to an entity controlled by Phillip R. Bennett, its Chief Executive Officer and Chairman and controlling shareholder.
On October 10, 2005, Refco announced that Bennett was being placed on a leave of absence and that the Company had discovered a receivable of $430 million owed by Bennett to the Company. Refco also announced that based on the undisclosed related party transaction, its prior financial statements should not be relied upon. On this news, the price of Refco stock undertook a dramatic decline, plunging $12.96, or 45.4%, to close at $15.60, on unprecedented volume of over 24.2 million shares. On October 12, the U.S. Attorney's Office in New York announced that it had filed securities fraud charges against Bennett with in connection with his hiding hundreds of millions of dollars from investors who bought stock in Refco's IPO.
If you are a member of the class described above, you may, not later than December 12, 2005, move the Court to serve as lead plaintiff of the class, if you so choose. A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member's claim is typical of the claims of other class members, and that the class member will adequately represent the class. Under certain circumstances, one or more class members may together serve as "lead plaintiff." Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. You may retain Wechsler Harwood, or other counsel of your choice, to serve as your counsel in this action.
Wechsler Harwood has taken a leading role in many important actions on behalf of defrauded shareholders. The Wechsler Harwood website (www.whesq.com) has more information about the firm and detailed information regarding this matter. If you wish to discuss this action with us, or have any questions concerning this notice or your rights and interests with regard to the case, please contact the following:
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca