Corporate Governance Issues at Refco Inc.

Immediately after the accounting fraud was made public, investigators began their attempts to unravel several aspects of the fraud - whether Bennett had been assisted by Refco officials in carrying out the fraud, whether there had been an insider who made false journal entries, or whether the company had paid outside parties to provide confirmations of transactions to deceive auditors. In the weeks following the announcement, auditors, underwriters, lawyers, and former Bennett subordinates came under strict scrutiny by federal prosecutors. Refco's shareholders filed class action lawsuits against Refco, Lee Partners, Grant Thornton LLP (Grant Thornton) (Refco's auditors), CSFB, Goldman Sachs, and Mayer Brown...

As of 2006, Refco, LLC, operated under the name of Man Financial-Refco Division. Bennett, who, in 2005, had been the billionaire CEO of Refco, the leading company in the US$ 20 trillion US futures industry, was reduced to being another criminal defendant. In addition to his freedom, the money he made through the sale of Refco stock was also under a cloud, as the US Attorney General's office was seeking to claim US$ 700 million from Bennett. In June 2006, BAWAG, which had been sued for helping Refco hide the losses, agreed to pay US$ 675 million to Refco's creditors in a complex settlement reached by federal prosecutors...