NEW YORK, Oct. 14, 2005 (PRIMEZONE) -- On October 12, 2005, Pomerantz Haudek Block Grossman & Gross LLP (www.pomerantzlaw.com) filed a class action complaint in the United States District Court, Southern District of New York, on behalf of investors who purchased the common stock of Refco, Inc. ("Refco" or "Company") (NYSE:RFX) between August 11, 2005 and October 7, 2005 ("Class Period"). Refco has now conceded that the Registration Statement that was issued in connection with its August 11, 2005 initial public offering ("IPO") contained false financials and failed to disclose a $430 million debt owed to it by a company controlled by its CEO, Chairman and controlling shareholder, Philip R. Bennett. Defendants are Refco, Bennett, Gerald M. Sherer (Refco's CFO), certain underwriters, and Refco's outside auditors, Grant Thornton LLP. Plaintiff seeks remedies under Sections 11 and 15 of the Securities Act of 1933 and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934.
On October 10, 2005, just nine weeks after the IPO, Refco disclosed that defendant Bennett owed Refco $430 million and was being placed on a leave of absence. Refco revealed that the "receivable was the result of the assumption by an entity controlled by Mr. Bennett of certain historical obligations owed by unrelated third parties to the Company, which may have been uncollectible." Significantly, the Company also acknowledged that based on the undisclosed related party transaction, its prior financial statements for the fiscal years ending 2002 through 2005 and the quarter ended May 31, 2005 should not be relied upon. On October 11, 2005, the Company conceded that the uncollectible receivable arose as "far back as at least 1998." On October 12, 2004, defendant Bennett was arrested after being charged with one count of securities fraud. On October 13, 2005, it was reported that a subsidiary of Refco, Refco Capital Markets Ltd., which provides clearing services to offshore hedge funds, was experiencing a cash crisis and would not allow its customers to withdraw their money for 15 days. The moratorium appears to have been prompted by an exodus of client accounts.
If you purchased the securities of Refco during the Class Period, you have until December 12, 2005 to ask the Court to appoint you as lead plaintiff for the Class. Lead plaintiffs must meet certain legal requirements. Shareholders outside the United States may also join the action, regardless of where they live or which exchange was used to purchase the securities. If you wish to review a copy of the Complaint, to discuss this action, or have any questions, please contact Teresa L. Webb (tlwebb@pomlaw.com) or Carolyn S. Moskowitz (csmoskowitz@pomlaw.com) of the Pomerantz Firm at 888.476.6529 (or 888.4-POMLAW), toll free. Those who inquire by e-mail are encouraged to include their mailing address and telephone number.
The Pomerantz Firm, which has offices in New York, Chicago and Washington, D.C., is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, the Pomerantz Firm pioneered the field of securities class actions. Today, more than 50 years later, the Pomerantz Firm continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca