Refco: who else was to blame?
Embattled American hedge fund Refco has widened its investigation into who was at fault for the $430m (£243m) black hole in its books.
In addition to the suspended former CEO Phillip Bennett and implicated senior executive Santo Maggio, the fund is believed to be looking at workers in data entry or finance departments who may have helped Bennett.
News of the enlarged investigation comes as the hedge fund closes in a on a deal to sell its core futures brokerage business to American private equity fund JC Flowers. Refco’s management and advisers have been locked in emergency talks since late Saturday night as its plight sent shock waves around global markets.
The fund now says it is in “advanced negotiations” with a consortium led by JC Flowers over Refco, which employs more than 2,400 employees in 14 countries worldwide. Refco expects to reach a memorandum of understanding with JC flowers, which has interests in Sinsei Bank and The Enstar Group, and thrash out a full deal later.
Man Group had previously been reported to be in talks with Refco, but the hedge fund group said yesterday it was not currently in talks. With changes to America’s Chapter 11 bankruptcy code coming into force at midnight Eastern Standard Time on Sunday, it had been thought that Refco might file for bankruptcy.
This would have enabled Refco to claim Chapter 11 protection indefinitely, but advisers had concerns that a filing would complicate a white knight deal to rescue it. The deal comes more than a week after Refco said it was putting Britain based chief executive officer Philip Bennett on leave after it was discovered he had taken a secret $430m loan from the company.