NEW YORK, Oct. 19, 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") (NYSE:RFX) (Pink Sheets:RFXCQ) 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 $430 million in uncollectible debts owed to it by a company controlled by Philip R. Bennett, Refco's CEO, Chairman and controlling shareholder. Bennett engaged in offsetting transactions with a hedge fund client of Refco at the end of each quarter and the beginning of the next to keep the bad debt off Refco's books. Defendants in the case 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 first announced the existence of the uncollectible debt and acknowledged that this debt rendered its financial statements from 2002 through the quarter ended May 31, 2005 unreliable. Some of these financial statements were included in the Registration Statement. On October 12, 2005, Bennett was arrested after being charged with one count of securities fraud. It has also been reported that Grant Thornton, retained by Refco in 2002 to replace the scandal-ridden Arthur Andersen, used as the lead partner on its audits of Refco the very same person who had led Arthur Andersen's audits of the company.
The fallout from these disclosures has been devastating. After the revelation of the $430 million uncollectible loan, Refco's stock price dropped off the cliff, falling from over $28 to $7.90, a drop of more than 72%, before trading was halted by the NYSE on October 13. When trading resumed over the counter, the bottom completely fell out of the stock price, with the stock today trading at substantially below $1.00. On October 18, the NYSE moved to delist the stock. On October 17, Refco filed for bankruptcy. Buyers have emerged for all or parts of Refco.
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