Refco

About Refco

Refco, one of the largest commodities brokers in the US, filed for bankruptcy on October 17, 2005, just weeks after its IPO. Refco had raised 583 million in its August 2005 IPO at 22 per share. In October, the company revealed that CEO Phillip Bennett had hidden 430 million in bad debts by transferring them to a shell company. Bennett was arrested and charged with securities fraud. He eventually pleaded guilty and was sentenced to 16 years. The Refco bankruptcy was notable because the fraud was discovered so soon after the IPO. Underwriters, including Credit Suisse and Bank of America, faced shareholder lawsuits. Refco assets were sold in bankruptcy. The case demonstrated failures in IPO due diligence.