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This website provides information and updates relating to In re Refco, Inc. Securities Litigation, 05 Civ. 8626 (GEL) (S.D.N.Y.), a consolidated securities fraud class action pending in the United States District Court for the Southern District of New York before District Court Judge Gerard Lynch.

The action is on behalf of persons and entities who purchased or acquired the securities of Refco, Inc. (“Refco” or the “Company”) during the period from July 1, 2004 through October 17, 2005.  The lawsuit arises from the collapse of Refco, a once prominent brokerage, following the revelation that the Company had for years secreted hundreds of millions of dollars of uncollectible receivables with a related entity controlled by Phillip Bennett, the Company’s Chairman and Chief Executive Officer.  This revelation caused the stunning collapse of the Company a mere two months after its August 10, 2005 initial public offering of common stock.  As a result, Refco filed the fourth largest bankruptcy in U.S. history.

June 22, 2012 – Judge Rakoff Enters Supplemental Distribution Order

On June 18, 2012, Lead Plaintiffs filed papers with the Court in support of approval of a proposed Supplemental Distribution Order that would, among other things, authorize payment with respect to certain additional late claims and claims that were previously rejected but whose deficiencies were subsequently cured by submission of additional documents, and authorize the Claims Administrator to conduct a second distribution of the Net Settlement Funds. On June 22, 2012, Judge Rakoff entered the proposed Supplemental Distribution Order.  Click here to view the Court’s Order.

September 30, 2011 – Judge Rakoff Enters Order Approving Payment of Eligible Claims-In-Process, Late Adjusted Claims, and Late Submitted Claims

On September 22, 2011, Lead Plaintiffs filed papers with the Court in support of approval of an order authorizing payment with respect to certain eligible claims that were still in process at the time the Court approved the initial distribution order, claims that were previously rejected but whose deficiencies were subsequently cured by submission of additional documents, and certain claims that were submitted after the filing of the previous distribution motion that were otherwise eligible for payment. On September 30, 2011, Judge Rakoff entered the proposed order. Click here to view the Court’s Order.

May 2, 2011 – Judge Rakoff Enters Order Approving Initial Distribution of Net Settlement Funds to Authorized Claimants

On April 18, 2011, Lead Plaintiffs filed papers with the Court in support of a motion for approval of a Distribution Plan that would permit the distribution of the net settlement funds created by the settlements achieved in the Action as well as a portion of the funds recovered by Lead Plaintiffs and Lead Counsel from victim restitution funds established by government to Class Members whose claims are approved for payment, with the remainder of the victim restitution funds to be held in reserve for future payment of additional claims. On May 2, 2011, Judge Rakoff entered the proposed order approving the Distribution Plan. Click here to view the Court's Order.

March 22, 2011 – Judge Rakoff Approves Settlements with Grant Thornton LLP and Settling Officer Defendants

On March 22, 2011, following a Settlement Hearing on March 11, 2011, the Honorable Jed S. Rakoff entered orders granting final approval to the settlements reached with defendant Grant Thornton LLP and with defendants Joseph J. Murphy, Dennis A. Klejna and William M. Sexton (the “Settling Officer Defendants”), which together provided for an additional payment to the Settlement Class of $25.3 million. Judge Rakoff also certified the Settlement Class as to these defendants, authorized the application of the previously approved Plan of Allocation to the proceeds of these settlements, and approved Lead Counsel’s motion for attorneys’ fees and expenses. Click here to view the related Judgments and Court Orders. Approval of these settlements concludes the litigation – unless a petition for certiorari filed by Lead Plaintiffs and pending in the U.S. Supreme Court is granted, in which case the litigation will resume against two other defendants against whom claims were previously dismissed. Click here to view the related Judgments and Court Orders.

Approval of these settlements concludes the litigation – unless a petition for certiorari filed by Lead Plaintiffs and pending in the U.S. Supreme Court is granted, in which case the litigation will resume against two other defendants against whom claims were previously dismissed.

February 4, 2011 – Lead Plaintiffs Submit Papers in Support of Final Approval of Settlements with Grant Thornton LLP and Settling Officer Defendants, and Lead Counsel Submit Papers in Support of Their Motion for Attorneys’ Fees and Expenses

On February 4, 2011, Lead Plaintiffs filed papers with the Court in support of final approval of the proposed settlements with Grant Thornton LLP and with Joseph J. Murphy, Dennis A. Klejna and William M. Sexton (the “Settling Officer Defendants”), authorization to apply the previously approved Plan of Allocation of the settlement proceeds to these additional settlements, and final certification of the settlement class as to these defendants. Lead Counsel also filed papers in support of their motion for attorneys’ fees and reimbursement of expenses. Click here to view the associated filings on our Lead Plaintiff Filings page. Judge Rakoff will consider the motions at the Settlement Hearing to be held on March 11, 2011 at 4:00 p.m.

November 12, 2010 – Judge Rakoff Grants Preliminary Approval to Settlements with Grant Thornton LLP and Settling Officer Defendants

On November 12, 2010, the Honorable Jed S. Rakoff granted preliminary approval to settlements reached between Lead Plaintiffs and Refco’s former auditor, Grant Thornton LLP and between Lead Plaintiffs and Joseph J. Murphy, Dennis A. Klejna and William M. Sexton, providing for total payments of $25,300,000 for the benefit of the Settlement Class. Judge Rakoff also preliminarily certified a settlement class as to these defendants and approved the distribution of notice to class members concerning these settlements. Click here to view the Court Order.

Judge Rakoff scheduled a hearing (the “Settlement Hearing”) for March 11, 2011 at 4:00 p.m. at the United States Courthouse, 500 Pearl Street, New York, NY 10007. The purpose of the Settlement Hearing will be to determine, among other things, whether the proposed settlements are fair, reasonable and adequate and should be approved by the Court and whether the plaintiffs’ attorneys’ application for an award of attorneys’ fees and reimbursement of litigation expenses should be granted. If you purchased or otherwise acquired Refco Group Ltd., LLC/Refco Finance Inc. 9% Senior Subordinated Notes due 2012 (CUSIP Nos. 75866HAA5 and/or 75866HAC1) and/or common stock of Refco (CUSIP No. 75866G109) during the period July 1, 2004 through and including October 17, 2005, you may be eligible to participate in the settlements and your rights may be affected.

PLEASE NOTE THE FOLLOWING KEY DATES WITH RESPECT TO THE CURRENT SETTLEMENTS:

    Deadline for Filing a Proof of Claim: March 15, 2011
    Deadline for Requesting Exclusion: February 19, 2011
    Deadline for Objections: February 19, 2011
    Settlement Hearing: March 11, 2011

A Notice describing these settlements was mailed to potential Settlement Class members beginning on December 15, 2010, together with a copy of the Court-approved Plan of Allocation, which has been updated to apply to the settlements with defendant Grant Thornton and defendants Joseph J. Murphy, Dennis A. Klejna and William M. Sexton. You can access and download these documents by clicking here.

PLEASE NOTE, if you previously submitted a proof of claim form in connection with the earlier approved settlements in this action, do not submit another claim form. Your earlier claim will be considered for participation in the current settlements with defendant Grant Thornton LLP and defendants Joseph J. Murphy, Dennis A. Klejna and William M. Sexton.

If you have not previously submitted a Proof of Claim form in the Refco Securities Litigation, you must submit one postmarked no later than March 15, 2011. Click here to download the Proof of Claim to participate in the settlements with defendant Grant Thornton LLP and defendants Joseph J. Murphy, Dennis A. Klejna and William M. Sexton.

FOR ADDITIONAL IMPORTANT INFORMATION ABOUT THESE SETTLEMENTS, PLEASE CLICK HERE.

October 27, 2010 – Judge Rakoff Approves Settlements with Audit Committee Defendants and THL Defendants and with Underwriter Defendants and approves Plan of Allocation

On October 27, 2010, following a Settlement Hearing, the Honorable Jed S. Rakoff granted final approval to the settlements reached with the Audit Committee Defendants and the THL Defendants and the Underwriter Defendants (including Sandler O’Neil & Partners, L.P.). Judge Rakoff certified the settlement class as to these defendants and approved the proposed Plan of Allocation for the settlement proceeds. Judge Rakoff also approved Lead Counsel’s motion for attorneys’ fees and expenses.  Click here to view the related Court Orders and Judgments.

October 20, 2010 - Lead Plaintiffs Submit Supplemental Papers in Support of Final Approval of Settlements with Audit Committee Defendants and THL Defendants and with Underwriter Defendants

On October 20, 2010, Lead Plaintiffs and Lead Counsel filed supplemental papers with the Court in further support of Lead Plaintiffs’ motion for final approval of the proposed settlements with the Audit Committee Defendants and the THL Defendants and with the Underwriter Defendants and final approval of the proposed Plan of Allocation of the settlement proceeds, and in further support of Lead Counsel’s motion for attorneys’ fees and reimbursement of expenses. Click here to view the associated filings on our Lead Plaintiff Filings page.

October 18, 2010 - Lead Plaintiffs Present Settlements with Grant Thornton LLP and with the Settling Officer Defendants to Court for Preliminary Approval

On October 18, 2010, Lead Plaintiffs presented a proposed settlement with Refco’s former auditor, Grant Thornton LLP and a proposed settlement with Joseph J. Murphy, Dennis A. Klejna and William M. Sexton (the “Settling Officers Defendants”) to the Court for preliminary approval and certification of the settlement class as against these settling defendants. If preliminarily approved, a notice explaining the settlements in greater detail will thereafter be sent to Class members, who will have an opportunity to file any formal objections they may have before a final approval hearing is held by the Court. Click here to view the associated filings on our Lead Plaintiff Filings page.

September 22, 2010 – Lead Plaintiffs Submit Papers in Support of Final Approval of Settlements with Audit Committee Defendants and THL Defendants and with Underwriter Defendants, and Lead Counsel Submit Papers in Support of Their Motion for Attorneys’ Fees and Expenses

On September 22, 2010, Lead Plaintiffs filed papers with the Court in support of final approval of the proposed settlements with the Audit Committee Defendants and the THL Defendants and with the Underwriter Defendants (discussed in more detail below), final approval of the proposed Plan of Allocation of the settlement proceeds, and final certification of a class for settlement purposes. Lead Counsel also filed papers in support of their motion for attorneys’ fees and reimbursement of expenses. Click here to view the associated filings on our Lead Plaintiff Filings page. Judge Rakoff will consider the motions at the Settlement Hearing to be held on October 27, 2010 at 4:00 p.m.

July 30, 2010 – Judge Rakoff Grants Preliminary Approval to Settlements with Audit Committee Defendants and THL Defendants and with Underwriter Defendants and sets Settlement Hearing

On July 30, 2010, the Honorable Jed S. Rakoff granted preliminary approval to a settlement reached between Lead Plaintiffs and the Audit Committee Defendants and the THL Defendants, which provides for a payment of $130 million for the benefit of the settlement class, plus a possible additional settlement payment of up to $10 million; and to a settlement reached between Lead Plaintiffs and the Settling Underwriter Defendants, which provides for payment of $49.5 million for the benefit of the settlement class. Judge Rakoff also preliminarily certified a settlement class for these settlements and approved the distribution of notice to class members concerning these settlements and a settlement between Lead Plaintiffs and Sandler O’Neill & Partners L.P., which provides for a payment of $3.5 million, that had previously been preliminarily approved. The action is continuing against the remaining defendants. Click here to view the Court Orders.

Judge Rakoff scheduled a hearing (the “Settlement Hearing”) for October 27, 2010 at 4:00 p.m. at the United States Courthouse, 500 Pearl Street, New York, NY 10007. The purpose of the Settlement Hearing will be to determine, among other things, whether the proposed settlements are fair, reasonable and adequate and should be approved by the Court; whether the proposed plan of allocation for the settlement proceeds is fair and reasonable and should be approved; and whether the plaintiffs’ attorneys’ application for an award of attorneys’ fees and reimbursement of litigation expenses should be granted.

If you purchased or otherwise acquired Refco Group Ltd., LLC/Refco Finance Inc. 9% Senior Subordinated Notes due 2012 (CUSIP Nos. 75866HAA5 and/or 75866HAC1) and/or common stock of Refco (CUSIP No. 75866G109) during the period July 1, 2004 through and including October 17, 2005, you may be eligible to participate in the settlements and your rights may be affected.

PLEASE NOTE THE FOLLOWING KEY DATES WITH RESPECT TO THESE SETTLEMENTS:

    Deadline for Filing a Proof of Claim:  November 9, 2010
    Deadline for Requesting Exclusion:   October 7, 2010
    Deadline for Objections:                  October 7, 2010
    Settlement Hearing:                        October 27, 2010
The settlements are described in two separate notices; the Plan of Allocation, which applies to all settlements is a separate document; and the Proof of Claim form, which also applies to all settlements is a separate document. You can access and download the documents separately by clicking here. or download the entire Notice Packet by clicking here.

FOR ADDITIONAL IMPORTANT INFORMATION ABOUT THESE SETTLEMENTS, PLEASE CLICK HERE.

Securities Brokers and other Nominees: To obtain copies of the Notice Packet for mailing to beneficial owners please click here.

April 20, 2010 - Lead Plaintiffs Present Settlement with Remaining Underwriter Defendants to the Court for Preliminary Approval

On April 20, 2010, Lead Plaintiffs presented the settlement with the remaining Underwriter Defendants to the Court for preliminary approval and certification of the settlement class. If preliminarily approved, notice explaining the settlement in greater detail will thereafter be sent to Class members, who will have an opportunity to file any formal objections they may have before a final approval hearing is held by the Court. The timing of the distribution of the funds recovered in this settlement to Class members has not yet been determined. Click here to view the associated filings on our Lead Plaintiff Filings page.

In October 2008, Lead Plaintiffs signed a stipulation and agreement of settlement with Underwriter Defendant Sandler O’Neill & Partners, L.P. for a payment of $3.5 million in cash, which the Court preliminarily approved on November 5, 2008 (see below). If the Court grants final approval to these two settlements, the claims against the Underwriter Defendants will be resolved for a total payment of $53 million in cash.

April 20, 2010 - Lead Plaintiffs Reach Partial Settlement with Remaining Underwriter Defendants for Payment of $49.5 Million in Cash, Bringing Total Settlement with the Underwriters to $53 Million in Cash

On April 20, 2010, Lead Plaintiffs RH Capital Associates LLC and Pacific Investment Management Company LLC signed a stipulation and agreement of settlement with Defendants Credit Suisse Securities (USA) LLC, Banc of America Securities LLC, Deutsche Bank Securities Inc., Goldman, Sachs & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities Inc., HSBC Securities (USA) Inc., William Blair & Company, L.L.C., BMO Capital Markets Corp. (f/k/a Harris Nesbitt Corp.), Samuel A. Ramirez & Company, Inc., Muriel Siebert & Co., Inc., and The Williams Capital Group, L.P. (collectively, the “Settling Underwriter Defendants”) for a payment of $49.5 million in cash. Further to the settlement, the claims against Defendants CMG Institutional Trading, LLC and Utendahl Capital Partners, L.P. will be dismissed.

April 5, 2010 - Lead Plaintiffs Present Settlement with THL Defendants And Audit Committee Defendants to Court for Preliminary Approval

On April 5, 2010, Lead Plaintiffs presented the settlement with the THL Defendants and the Audit Committee Defendants to the Court for preliminary approval and certification of the settlement class. If preliminarily approved, notice explaining the settlement in greater detail will thereafter be sent to Class members, who will have an opportunity to file any formal objections they may have before a final approval hearing is held by the Court. The timing of the distribution of the funds recovered in this settlement to Class members has not yet been determined. Click here to view the associated filings on our Lead Plaintiff Filings page.

March 29, 2010 - Lead Plaintiffs Reach Partial Settlement with THL Defendants And Audit Committee Defendants for Payment of at Least $130 Million in Cash

On March 29, 2010, Lead Plaintiffs RH Capital Associates LLC and Pacific Investment Management Company LLC signed a stipulation and agreement of settlement with Defendants Ronald L. O’Kelley, Leo R. Breitman and Nathan Gantcher (collectively, the “Audit Committee Defendants”); Thomas H. Lee Equity Fund V, L.P., Thomas H. Lee Parallel Fund V, L.P. and Thomas H. Lee Equity (Cayman) Fund V, L.P. (collectively, the “THL Funds”); Thomas H. Lee Partners, L.P., THL Equity Advisors V, LLC, Thomas H. Lee Investors Limited Partnership and The 1997 Thomas H. Lee Nominee Trust and any predecessor or related THL Entities named in any prior version of the Complaint, (collectively, with the THL Funds, the “THL Entities”) and Thomas H. Lee, David V. Harkins, Scott L. Jaeckel and Scott A. Schoen (collectively, with the THL Entities, the “THL Defendants”) for a payment of $130 million in cash, plus an amount equal to 50% of any additional amount that the THL Entities receive as restitution from the government in connection with their claims against Refco, up to a maximum additional amount of $10 million.

July 10, 2009 – Refco’s Attorney Convicted Of Securities Fraud For Role In Scheme To Defraud Investors

On July 10, 2009, Lawyer Joseph P. Collins (Refco Inc.’s principal outside counsel and former senior partner at Mayer Brown LLP) was convicted by a federal jury for his role in the massive scheme to defraud investors. After a nine-week trial, Collins was criminally convicted on five of the fourteen counts with which he was charged, including two counts of securities fraud, one count of conspiracy and two counts of wire fraud. Collins is scheduled to be sentenced on November 3, 2009.

July 6, 2009 – Lead Plaintiffs File Brief In Support of Their Appeal From Dismissal of Securities Fraud Claims Against Joseph P. Collins and Mayer Brown LLP

On July 6, 2009, Lead Plaintiffs filed a brief with the United States Court of Appeals for the Second Circuit seeking to appeal from Judge Gerard E. Lynch’s decision dismissing their claims under the Securities Exchange Act of 1934 against defendants Joseph P. Collins and Mayer Brown LLP. In the appeal, Lead Plaintiffs presented the following issues to the Second Circuit for review:

    1. Whether a lawyer and law firm commit a primary violation of the securities laws, or are merely “aiders and abettors” of a corporate client’s violations of those laws, when they design, structure, and implement sham loan transactions for the purpose of concealing their corporate client’s true financial condition, and then ensure that the sham loans will be concealed from investors by drafting false securities offering documents.

    2. Whether investors can satisfy the reliance element of a securities fraud claim against a lawyer and law firm who intentionally draft false securities offering documents on their client’s behalf, if the documents identify the law firm as counsel but do not explicitly credit the lawyer or law firm with authorship.

    3. Whether investors can satisfy the reliance element of a securities fraud claim against a corporation’s lawyers when the corporation publicly reports phantom “customer receivables” that are in fact the product of sham loans devised and effectuated by its lawyers.
Click here to view the associated filings on our Lead Plaintiff Filings page.

May 29, 2009 – Lead Plaintiffs File Reply Memorandum in Further Support of Partial Summary Judgment Motion Against Seven Investment Banks

On May 29, 2009, Lead Plaintiffs filed their reply memorandum in further support of their summary judgment motion against seven of the investment banks that sold Refco shares to investors in connection with Refco’s August 2005 IPO. Click here to view the associated filings on our Lead Plaintiff Filings page. Click here to view the associated filings on our Lead Plaintiff Filings page.

April 16, 2009   – Lead Plaintiffs File Notice Of Appeal From Dismissal of Securities Fraud Claims Against Joseph P. Collins and Mayer Brown LLP

On April 16, 2009, Lead Plaintiffs filed notice of their appeal to the United States Court of Appeals for Second Circuit from Judge Gerard E. Lynch’s decision dismissing their claims under the Securities Exchange Act of 1934 against defendants Joseph P. Collins and Mayer Brown LLP. Click here to view the associated filings on our Lead Plaintiff Filings page.

April 1, 2009 – Lead Plaintiffs File Partial Summary Judgment Motion Against Seven Investment Banks

On April 1, 2009, Lead Plaintiffs RH Capital Associates LLC and Pacific Investment Management Company LLC filed a Motion for Partial Summary Judgment against seven of the investment banks that sold Refco shares to investors pursuant to an August 2005 registration statement that contained Refco’s false financial statements. As explained further below, Lead Plaintiffs have asked the District Court to find these banks liable as a matter of law based on their failure either to (a) conduct any due diligence whatsoever concerning Refco’s financial statements, or (b) inquire whether any other bank had done any diligence – failures that six of the seven banks conceded under oath during recent pre-trial depositions.

Named in the motion are Defendants William Blair & Company, LLC, Utendahl Capital Partners, L.P., Samuel A. Ramirez & Company, Inc., Muriel Siebert & Co. Inc., The Williams Capital Group, L.P. Harris Nesbitt Corp. (n/k/a BMO Capital Markets, Inc.) and CMG Institutional Trading LLC (collectively, the “Junior Underwriters”). Specifically, the motion seeks partial summary judgment regarding the Junior Underwriters’ liability for violations of Section 11 of the Securities Act of 1933 based on the materially untrue and misleading statements contained in Refco’s IPO Registration Statement, including, in particular, in the “non-expertised” parts such as the unaudited financial statements and management’s discussion and analysis. Refco itself has admitted that the IPO Registration Statement contained materially untrue and misleading statements, as have other defendants to this action.

In certain circumstances, Section 11 of the Securities Act provides underwriters with an opportunity to persuade a jury at trial that they had, after a “reasonable investigation” (or "due diligence"), reasonable ground to believe and did believe that a registration statement was accurate. According to Lead Plaintiffs' motion, the Junior Underwriters can never meet their burden to establish such a defense here due to the fact that six of the Junior Underwriters expressly chose not to take any steps to investigate the accuracy of the IPO Registration Statement, and did not even check whether the lead underwriters were adequately conducting such an investigation. (There is no evidence that the seventh Junior Underwriter took any such steps).

In light of the admittedly untrue and misleading IPO Registration Statement and the Junior Underwriters’ failure to take any steps to investigate its accuracy or verify whether any other underwriter was adequately doing so, Lead Plaintiffs assert that there is no genuine issue of material fact as to the Junior Underwriters’ liability under Section 11, and that judgment of liability against these banks is appropriate as a matter of law.

Click here to view the associated filings on our Lead Plaintiff Filings page.

March 17, 2009 - Judge Lynch Grants Motions To Dismiss Brought By Joseph P. Collins And Mayer Brown LLP; States That Supreme Court And Congress Have "Declined To Provide A Private Right Of Action For Victims Of Securities Fraud" Against Parties Who Allegedly Aided And Abetted The Fraud At Refco

On March 17, 2009, the Honorable Gerard E. Lynch issued an opinion that granted motions to dismiss brought by Joseph P. Collins ("Collins"), Refco's long term outside counsel, and Mayer Brown LLP ("Mayer Brown"), the law firm at which Collins was a senior partner.

According to the Complaint filed on December 3, 2007 by Lead Plaintiffs, at each step along the path that eventually led to Refco's collapse, Refco's former Chief Executive Officer Philip R. Bennett turned to Collins - his long-term lawyer and "go-to-guy" at Mayer Brown - to assist in devising, documenting and concealing the massive fraudulent scheme that resulted in Refco's false and misleading financial statements. The Complaint alleges that Mayer Brown's and Collins' involvement in the fraudulent scheme that led to Refco's collapse extended over a five-year period and involved at least seventeen different sets of end-of-period loan transactions, all of which are alleged to have been complete shams designed to misrepresent Refco's financial health.

On December 18, 2007, Collins was criminally indicted for his role in the Refco fraud, and was charged with eleven counts of securities fraud and related charges. Just days after Collins' indictment, on December 20, 2007, Collins and Mayer Brown filed their motions to dismiss Lead Plaintiffs' claims of securities fraud and control person liability relating to Refco's collapse.

In granting Collins' and Mayer Brown's motions to dismiss, Judge Lynch stated (see p. 2):

"Although the Complaint alleges facts that, if true, would make the Mayer Brown defendants guilty of aiding and abetting the securities fraud that harmed the plaintiffs, the Supreme Court and Congress have declined to provide a private right of action for victims of securities fraud against those who merely - if otherwise substantially and culpably - aid a fraud that is executed by others."

Judge Lynch further commented (see p. 25, fn 15):

"It is perhaps dismaying that participants in a fraudulent scheme who may even have committed criminal acts are not answerable in damages to the victims of the fraud. However, as the Court noted in Stoneridge, the fact that the plaintiff-investors have no claim is the result of a policy choice by Congress. [...] This choice may be ripe for legislative re-examination. ...[A] bright line between principals and accomplices may not be appropriate. There are accomplices and there are accomplices: after all, in the criminal context when the Godfather orders a hit, he is only an accomplice to murder - one who "counsels, commands, induces or procures" but he is nonetheless liable as a principal for the commission of crime. Likewise, some civil accomplices are deeply and indispensably implicated in the wrongful conduct."

Lead Plaintiffs are presently considering an appeal of this dismissal of their claims against Collins and Mayer Brown.

Click here to view Judge Lynch's Opinion. Click here to view all Court Orders.

January 15, 2009 - The U.S. Department of Justice (the "DOJ") Seeks Information Regarding the Impact of the Refco Fraud on its Victims

If you are a victim of the Refco fraud and would like to provide information to the DOJ regarding the financial, emotional or other impact this crime has had upon your life, please call 212-554-1400 and ask to speak to Gary Weston or Jeremy Robinson.

November 5, 2008 - Judge Lynch Grants Preliminary Approval to Partial Settlement with Defendant Sandler O'Neill & Partners, L.P.

On November 5, 2008, the Honorable Gerard E. Lynch granted preliminary approval to the partial settlement reached between Lead Plaintiffs and Defendant Sandler O'Neill & Partners L.P. In his preliminary approval order, Judge Lynch wrote that "[i]n the interests of conserving expenses to the class, the Court shall defer until a later date the preliminary approval of a proposed notice and notice procedures for the Settlement, and the scheduling of a hearing for final approval of the Settlement." Click here to view Judge Lynch's Opinion. Click here to view all Court Orders.

October 27, 2008 - Lead Plaintiffs Present Settlement with Defendant Sandler O'Neill & Partners L.P. to Court for Preliminary Approval

On October 27, 2008, Lead Plaintiffs presented the settlement with Defendant Sandler O'Neill & Partners L.P. (a junior member of the 15-member underwriting syndicate who underwrote approximately 2.8% of the IPO) to Judge Lynch for preliminary approval and certification of the settlement class. If preliminarily approved, notice explaining the settlement in greater detail will thereafter be sent to Class members, who will have an opportunity to file any formal objections they may have before a final approval hearing is held by Judge Lynch. The timing of the distribution of the funds recovered in this settlement to Class members has not yet been determined. Click here to view the associated filings on our Lead Plaintiff Filings page.

August 11, 2008 - Lead Plaintiffs Announce $3.5 Million Partial Settlement with Junior Underwriter

On August 11, 2008, Lead Plaintiffs RH Capital Associates LLC and Pacific Investment Management Company LLC signed a memorandum of agreement with Defendant Sandler O'Neill & Partners L.P. in partial settlement of the Refco securities fraud class action. Sandler O'Neill was a junior member of the 15-member investment banking syndicate that underwrote Refco's August 2005 initial public offering ("IPO"). In the IPO, Refco sold 30,475,000 shares at $22 per share to raise over $670 million. As a junior member of the underwriting syndicate, Sandler O'Neill underwrote approximately 2.8% of the IPO or approximately 850,000 of the 30,475,000 shares sold by Refco in the IPO.

In this settlement, Sandler O'Neill has agreed to pay to Lead Plaintiffs, on behalf of the Class, a total of $3.5 million in cash in exchange for a release from the Class' claims against Sandler O'Neill under the Securities Act of 1933.

Lead Plaintiffs expect to ask the Court to give preliminary approval to the settlement with Sandler O'Neill shortly, with notice to the Class of Refco investors to follow. The litigation against the other defendants, including the remaining fourteen investment banks, continues.

Click here to view Lead Plaintiffs' letter advising the Court of the partial settlement with Sandler O'Neill & Partners L.P. or view the letter on our Lead Plaintiff Filings page.

August 7, 2008 - Former Refco Owner, CEO and President Tone Grant is Sentenced to Ten Years In Prison For His Role In The Refco Fraud

On Thursday, August 7, 2008, Tone Grant, a former President, CEO (pre-1998), and 50% owner of Refco (until 2004), was sentenced to 10 years in prison for his role in the Refco fraud by Judge Naomi Reice Buchwald in the Southern District of New York. Following a criminal trial held earlier this year, Mr. Grant was found guilty of conspiracy, securities fraud, wire fraud, bank fraud and money laundering by a jury in federal court in Manhattan. At the sentencing hearing, Judge Buchwald said that Grant had an "irreplaceable role in the fraud." "[Grant] made the moral choice, over and over again, to join with [former Refco President, CEO and Chairman Phillip Bennett]," Judge Buchwald said. "Without Mr. Grant's participation and willingness to go along, there would be no case, no fraud."

July 3, 2008 - Former Refco CEO Phillip Bennett is Sentenced to Sixteen Years In Prison For His Role In The Refco Fraud

On Thursday, July 3, 2008, Phillip Bennett, the former President, CEO, Chairman and 50% owner of Refco, was sentenced to 16 years in prison by Judge Naomi Reice Buchwald in the Southern District of New York. Earlier this year, Mr. Bennett pleaded guilty to twenty counts of securities fraud and related criminal charges in connection with his role in the collapse of Refco. At the sentencing hearing, Judge Buchwald said that white-collar defendants like Bennett "just don't think they'll get caught." "You and others like you play a truly high-stakes poker game," the judge said. She also stated that, "To sentence you, I don't have to paint you as a monster and I have no intention of doing so."

Mr. Bennett has agreed to forfeit essentially all of his assets. Because he is a British citizen, he will be deported upon completing his prison term. Before he was sentenced, Mr. Bennett said that he had made an "unacceptable and appalling error" in the way he handled Refco's finances. "In doing so, I not only broke the law, I put in harm's way the very people I intended to help."

May 29, 2008 - Lead Plaintiffs Disclose Extensive Debriefings of Former Refco CEO Phillip Bennett

On May 29, 2008, in a letter submitted to the federal judge who will sentence former Refco CEO Phillip Bennett, Lead Counsel in the Refco securities class action disclosed that they have held a series of wide-ranging and extensive debriefings with Mr. Bennett, during which the former CEO provided important information concerning the conduct of various defendants in the Refco securities class action. For a copy of Lead Counsel's letter to the Honorable Naomi R. Buchwald, click here. The letter refers to several highly productive meetings between Lead Counsel and Mr. Bennett, and notes that his assistance has substantially enhanced the Class' claims against several of the defendants named in the class action complaint, including the T.H. Lee Defendants, the investment banks that helped Refco sell hundreds of millions of dollars of securities to investors, Refco's former auditor Grant Thornton LLP, and Refco's former corporate law firm, Mayer Brown LLP. Mr. Bennett, who pleaded guilty to a number of felonies in connection with his role in the Refco fraud, is scheduled to be sentenced on June 19, 2008.

March 26, 2008 - Judge Lynch Grants Preliminary Approval to Partial Settlement with Defendant Joseph J. Murphy

On March 26, 2008, the Honorable Gerard E. Lynch granted preliminary approval to the partial settlement reached between Lead Plaintiffs and defendant Joseph Murphy. Regarding the non-settling defendants who objected to the settlement with Murphy, Judge Lynch wrote that "the non-settling defendants' arguments are a rehash of the arguments made and rejected in connection with an earlier settlement agreement with defendant Dennis A. Klejna, and they are rejected again for the reasons fully set forth in the Court's order of January 22, 2008, granting preliminary approval to that settlement." Click here to view all Court Orders.

February 21, 2008 - Lead Plaintiffs Present Settlement with Defendant Joseph J. Murphy to Court for Preliminary Approval

On February 21, 2008, Lead Plaintiffs presented the settlement with Joseph J. Murphy (Refco Group's former Exec. Vice President and President of various Refco subsidiaries) to Judge Lynch for preliminary approval and certification of the settlement class. If the settlement is preliminarily approved, notice explaining the deal in greater detail will thereafter be sent to Class members, who will have an opportunity to file any formal objections they may have before a final approval hearing is held by Judge Lynch. The timing of the distribution of the funds recovered in this settlement to Class members has not yet been determined. Click here to view the associated filings on our Lead Plaintiff Filings page.

January 22, 2008 - Judge Lynch Grants Preliminary Approval to Settlement with Defendant Dennis A. Klejna

On January 22, 2008, the Honorable Gerard E. Lynch granted preliminary approval to the partial settlement reached between Lead Plaintiffs and defendant Dennis A. Klejna. Judge Lynch wrote that "[i]n the interests of conserving expense to the class, the Court will defer consideration of ... preliminary certification of the class, preliminary approval of notice to the class, and the scheduling of a fairness hearing, pending submission of additional motion(s) for approval of further settlements that Lead Plaintiffs have advised have already been reached in principle, or may soon be reached, with other defendants, which may appropriately be addressed in a single notice and at a single hearing." Click here to view Judge Lynch's Opinion. Click here to view all Court Orders.

December 7, 2007 - Lead Plaintiffs Present Settlement with Defendant Dennis A. Klejna to Court for Preliminary Approval

On December 7, 2007, Lead Plaintiffs presented the settlement with Dennis A. Klejna (Refco's former General Counsel and Exec. Vice President) to Judge Lynch for preliminary approval and certification of the settlement class. If the settlement is preliminarily approved, notice explaining the deal in greater detail will thereafter be sent to Class members, who will have an opportunity to file any formal objections they may have before a final approval hearing is held by Judge Lynch. The timing of the distribution of the funds recovered in this settlement to Class members has not yet been determined. Click here to view the associated filings on our Lead Plaintiff Filings page.

December 6, 2007 - Lead Plaintiffs Announce Settlement With Defendant Dennis A. Klejna for Payment of $7,600,000 and Cooperation Against Others Who Played Role in Refco Affair

On December 6, 2007, RH Capital Associates LLC and Pacific Investment Management Company LLC, the institutional investors appointed by U.S. District Judge Gerard E. Lynch to serve as Lead Plaintiffs on behalf of investors victimized by the Refco affair, signed a settlement agreement with Dennis A. Klejna ("Klejna"). Klejna was Refco's former General Counsel and Executive Vice President. Pursuant to the agreement, Klejna has agreed to pay to Lead Plaintiffs, on behalf of the Class, a total settlement amount of $7,600,000, including a personal contribution of $50,000.00 in cash.

In addition to the monetary payment, Klejna has pledged to cooperate with Lead Plaintiffs as they pursue the Class’ claims against other current (and prospective) defendants in the consolidated securities class action.

The settlement resolves two categories of claims asserted against Klejna in the Refco class action, namely, claims arising from Refco’s bond and stock offerings in 2004 and 2005, and claims arising out of the purchase of Refco securities in the open market between August 5, 2004 and October 17, 2005 . As part of the settlement, the Class’ claims against Klejna will be released.

This is the second settlement achieved for the Class in the Refco Securities Litigation. Lead Plaintiffs will continue to pursue the Class’ claims against the remaining defendants, which include several former Refco insiders (including former CEO Phillip Bennett), Refco’s former board of directors, Refco’s former auditor (Grant Thornton LLP), the investment banking concern that helped take Refco “public” in August 2005 (Thomas H. Lee Partners L.P. and related entities), and a total of fifteen investment banks that sold Refco stocks and bonds to public investors (including Goldman Sachs, Credit Suisse and Bank of America).

The attorneys who worked to achieve this settlement are partners Sean Coffey, Salvatore Graziano and John Browne and associate Jeremy Robinson of Bernstein Litowitz Berger & Grossmann LLP, and partners Stuart Grant, James Sabella, and Megan McIntyre of Grant & Eisenhofer P.A. Their work prosecuting the Class’ claims against other defendants in the Refco debacle continues.

December 3, 2007 - Lead Plaintiffs file Second Amended Consolidated Class Action Complaint

On December 3, 2007, Lead Plaintiffs RH Capital Associates LLC and Pacific Investment Management Company LLC and Plaintiff PIMCO Funds: Pacific Investment Management Series – PIMCO High Yield Fund filed a Second Amended Consolidated Class Action Complaint complaint which, among other things, collects and consolidates all complaints filed and defendants named to date (including Mayer Brown LLP and Mayer Brown partner Joseph P. Collins), updates Lead Plaintiffs' existing allegations and claims based on recently obtained information and adds new allegations against former Refco Group CFO Robert Trosten. Click here to view the Second Amended Complaint.

October 1, 2007 - Mayer Brown LLP and Joseph P. Collins Added as Named Defendants to the Refco, Inc. Securities Class Action

On October 1, 2007, Lead Plaintiffs RH Capital Associates LLC and Pacific Investment Management Company LLC and Plaintiff PIMCO Funds: Pacific Investment Management Series – PIMCO High Yield Fund filed a complaint adding Mayer Brown LLP (“Mayer Brown”) and Mayer Brown partner Joseph P. Collins (“Collins”) as named Defendants in the Refco, Inc. (“Refco”) securities class action pending before Judge Gerald E. Lynch in the Southern District of New York. Click here to view the Complaint.

According to the Complaint, at each step along the path that eventually led to Refco’s collapse, Refco’s former Chief Executive Officer Philip R. Bennett (“Bennett”) turned to his long-term “go-to-guy” at Mayer Brown, senior partner Collins, and other attorneys at Mayer Brown, to work with him in devising, documenting and concealing the massive fraudulent scheme that resulted in Refco’ false financial statements. The Complaint alleges that Refco, Collins and Mayer Brown devised a scheme whereby, just days before Refco closed its books for a given financial period, hundreds of millions of dollars would be “loaned” by Refco to third-parties, and pursuant to contracts drafted by Collins and Mayer Brown, the third-parties were required to simultaneously “loan” that same amount to an entity controlled by Bennett, which would use the proceeds to temporarily pay down a receivable it owed to Refco, leaving an apparently collectible receivable from a bona fide third-party on Refco’s books at period end. According to the Complaint, after the close of Refco’s financial period, the transactions would be unwound and the related-party receivable would be returned to Refco’s books, again pursuant to documents created by Collins and Mayer Brown.

The Complaint alleges that Mayer Brown’s and Collins’s involvement in this fraudulent scheme extended over a five-year period and involved at least seventeen different sets of end-of-period loan transactions, all of which are alleged to have been complete shams where, often, no money even changed hands.

Mayer Brown and Collins were referred to in Lead Plaintiffs’ Amended Class Complaint filed on May 5, 2006 as the “Law Firm” and “Attorney C,” respectively. Today’s Complaint adds them both as named defendants to the Refco Securities Litigation.

July 11, 2007 – Refco Examiner Files Final Report with Bankruptcy Court

On July 11, 2007, the independent examiner reviewing Refco’s 2005 bankruptcy filed his final report with the U.S. bankruptcy court in Manhattan. Click here to view the entire Report.

June 29, 2007 – Judge Lynch Grants Final Approval to BAWAG Settlement

On June 29, 2007, the Honorable Gerard E. Lynch granted final approval to the partial settlement reached between Lead Plaintiffs and defendant BAWAG for a total of $140 million (the “BAWAG Settlement”).  In doing so, Judge Lynch found the settlement to be fair, reasonable and adequate to the Class.  As part of the final approval opinion, Judge Lynch also certified as a Class for settlement purposes “…all persons and entities that purchased or otherwise acquired Refco Group Ltd., LLC/Refco Finance Inc. 9% Senior Subordinated Notes due 2012 and/or common stock of Refco, Inc. during the period August 5, 2004 through and including October 17, 2005 and who were damaged thereby (subject to certain exceptions).” Click here to view Judge Lynch's Opinion.

May 31, 2007 - Judge Lynch Rejects Request by Audit Committee Defendants and Defendant Silverman to Reconsider his April 30, 2007 Opinion Sustaining Lead Plaintiffs' Fraud Claims Against Them.

On May 31, 2007, the Honorable Gerard E. Lynch denied motions brought by the Audit Committee Defendants and Defendant Silverman for Judge Lynch to reconsider his April 30, 2007 Opinion rejecting these defendants' motions to dismiss. Click here to view Judge Lynch's Opinion. Click here to view all Court Orders.

April 30, 2007 - Judge Lynch Clears Way for Refco Class Action to Proceed; Denies Bulk of Defendants' Efforts to Dismiss Securities Claims

On April 30, 2007, the Honorable Gerard E. Lynch issued an 87-page opinion in which the Court denied the vast majority of the ten motions to dismiss filed by a total of twenty-eight defendants. Click here to view Judge Lynch’s Opinion. Among other things, Judge Lynch sustained Plaintiffs’ claims of securities fraud against Refco’s former auditor, Grant Thornton LLP, and the members of Refco’s Audit Committee. With the exception of one individual who was dismissed from the case (former Refco Group CFO Robert Trosten), the Refco Class Action will now proceed against all defendants named in Plaintiffs' First Amended Consolidated Class Action Complaint, including the Individual Defendants, the THL Defendants, the Underwriter Defendants and defendant Grant Thornton LLP. Click here to see the identities of the defendants.

March 5, 2007 – Judge Lynch Grants Preliminary Approval to BAWAG Settlement

On March 5, 2007, the Honorable Gerard E. Lynch preliminarily certified as a Class “…all persons and entities that purchased or otherwise acquired Refco Group Ltd., LLC/Refco Finance Inc. 9% Senior Subordinated Notes due 2012 (CUSIP Nos. 75866HAAS and/or 75866HAC1) and/or common stock of Refco, Inc. (CUSIP No. 7566G109) during the period August 5, 2004 through and including October 17, 2005 and who were damaged thereby (subject to certain exceptions).” Judge Lynch also granted preliminary approval to the partial settlement reached between Lead Plaintiffs and defendant BAWAG and scheduled a hearing (the “Settlement Hearing”) to take place on June 29, 2007 at the United States Courthouse, 500 Pearl Street, New York, NY, 1007. The purpose of the Settlement Hearing will be to determine, among other things, whether the proposed settlement with BAWAG is fair, reasonable and adequate to the Class and whether it should be approved by the Court. Click here to view Judge Lynch’s Opinion. Click here to view all Court Orders.

February 22, 2007 - Lead Plaintiffs Submit Revised BAWAG Settlement to Court for Preliminary Approval

On February 22, 2007, Lead Plaintiffs submitted a revised BAWAG settlement to Judge Lynch for preliminary approval and certification of the settlement class. The settlement has been revised to include language agreed between the parties regarding certain effects the settlement may have on the remainder of the litigation. Although certain terms of the settlement agreement have been revised, the amounts involved in the settlement remain the same. If the settlement is preliminarily approved, notice explaining the deal in greater detail will thereafter be sent to Class members, who will have an opportunity to file any formal objections they may have before a final approval hearing is held by Judge Lynch sometime in the Fall. The timing of the distribution of the funds recovered in this settlement to Class members has not yet been determined. Click here to view the associated filings on our Lead Plaintiff Filings page.

December 22, 2006 - Recent Developments Pertaining to Bankruptcy Proceedings

Refco’s Chapter 11 Plan Approved by Bankruptcy Court. The Plan offers equity holders an option to trade their Future Securities Class Action Recoveries for a Small Percentage of Bankruptcy Litigation Recoveries. The Securities Co-Lead Plaintiff who faces this choice will decline the Plan’s offer.

The following statement summarizes Lead Plaintiffs’ perspective on the Refco bankruptcy proceedings and their significance for members of the prospective securities class. The class is defined as current or former holders of Refco’s publicly traded securities who purchased or acquired those securities between August 5, 2004 and October 17, 2005 (the “Class Period”).  

On October 17, 2005, Refco, Inc. (together with certain of its direct and indirect subsidiaries and affiliates, collectively referred to here as “Refco” or the “Debtors”) filed for bankruptcy protection in the United States Bankruptcy Court for the Southern District of New York. Pursuant to bankruptcy law, Refco’s filing meant that the securities class action pending in the district court entitled In re Refco Inc. Securities Litigation, Case No. 05 civ 8626 (the “Securities Class Action”) could not include Refco as a defendant. Rather, any securities claims against Refco (as opposed to all other defendants sued in the securities class action) had to be lodged as a claim against the estate in the bankruptcy proceedings. Lead Plaintiffs RH Capital Associates LLC and Pacific Investment Management Company LLC filed such claims on behalf of all Class Members on July 17, 2006.  

On or about October 20, 2006, the Debtors filed a Joint Chapter 11 Plan. Subsequently, the Debtors filed a Modified Joint Chapter 11 Plan (the “Plan”) on December 4, 2006. Such plans are typically submitted to seek court approval of how a bankrupt entity plans to distribute its assets among various claimants (such as creditors and stockholders).  

On December 15, 2006, United States Bankruptcy Judge Robert D. Drain approved the Plan. Under the Plan, Refco will distribute approximately $4.1 billion – 24% of the $16.8 billion creditors were owed when it filed for bankruptcy – plus the Bankruptcy Litigation Recoveries from the lawsuits brought on behalf of Refco against third parties.  

Class Members are treated differently under the Plan depending on the type of Refco securities that they purchased and whether they still hold the securities, as described below.  

1) Current Bondholders - Current holders of Refco’s 9% bonds maturing in 2012 who hold an Allowed Claim (i.e., allowed pursuant to other applicable requirements under the Plan) will receive 83.42 cents on the dollar under the Plan. Current bondholders are not required to decide between receiving amounts recovered in connection with the Plan (as described below) or recovery of monies through the Securities Class Action. The Plan specifically provides that current bondholders who purchased during the Class Period may receive the benefit of both the BAWAG settlement in the bankruptcy proceeding and any proposed BAWAG settlement in the Securities Class Action.  

2) Former Bondholders - Those who purchased bonds during the Class Period but who no longer hold them are not entitled to any recovery on bond purchases under the Plan. These claims are being pursued on their behalf against other defendants in the Securities Class Action.  

3) Current and Former Stockholders - Current Refco stockholders and Class Members who are former holders of Refco stock and who hold an Allowed Interest (i.e., allowed pursuant to other applicable requirements under Plan) may elect to share in the amounts recovered by certain litigation trusts established under the Plan (the “Plan Trusts”). Specifically, these current and former Refco stockholders will be entitled to share in 3% of the first $500 million recovered by the Plan Trusts (i.e., up to $15 million), 7.5% of the next $500 million (i.e., up to $37.5 million), and 15% of any amounts recovered by the Plan Trusts in excess of $1 billion. If, for example, $1 billion is recovered by the Plan Trusts, current Refco stockholders and Class Members who are former holders of Refco stock and who elect to receive a portion of such recoveries will share $52.5 million based on the number of shares currently or previously held. As of today’s date, no funds have been placed in the Plan Trusts and there is no guarantee that there will ever be any money in these trusts to fund litigation.  

In order to participate in any distribution from the Plan Trusts, Refco stockholders who are Class Members must contribute to the Plan Trusts any recovery that they may receive on their equity claims from the Securities Class Action (other than from any BAWAG settlement, as explained further below). Additionally, these Class Members must make this assignment by January 30, 2007 at 5:00 pm (ET). Note that the recent settlement with BAWAG in the Securities Class Action is not affected by this provision. In other words, a Class Member who selects this option will not have to tender his or her share of the BAWAG recovery.  

If you are a Class Member based upon the purchase of Refco stock and you have already filed a claim in the bankruptcy proceeding and you make this election, you will not receive any direct recovery of your losses on your equity-based claims from the Securities Class Action. Instead, you will contribute that entire recovery to the Plan Trusts and share only in a small percentage (from 3% to 15%) of the aggregate amount recovered by the Plan Trusts with all other current stockholders and Class Members who have claims based upon stock purchases, as well as certain other creditors, who also made the election.  

For example, if Class Members were to recover $50 million collectively in the Securities Class Action as compensation for their losses on Refco stock, and the election was made on behalf of the Class under the Plan, the $50 million would go directly to the Plan Trusts and those Class Members would share in only a small percentage (as low as 3%) of that recovery along with holders of stock who are not Class Members. The Plan Trusts would have to recover approximately $1 billion in the aggregate to potentially achieve the same economic result for these Class Members as a direct $50 million recovery in the Securities Class Action absent the election. Therefore, it is the judgment of Lead Plaintiff RH Capital Associates LLC and Lead Counsel that the election offered under the Plan is not in the best economic interest of Class Members who purchased Refco stock.  

If you are a former Refco shareholder and did not file a bankruptcy claim by the July 17, 2006 deadline, this option is not available to you.  

Lead Plaintiff RH Capital Associates LLC, in representing itself, will not relinquish its right to amounts that may be recovered in the Securities Class Action in exchange for receipt of some allotment of 3 to 15% of the amounts recovered by the Plan Trusts. Nor will Lead Plaintiff RH Capital Associates LLC pursue such an option on behalf of the prospective class in the bankruptcy proceeding or the Securities Class Action. Lead Plaintiff Pacific Investment Management Company LLC held only Refco bonds and is therefore not required to make this election.  

September 8, 2006 - Lead Plaintiffs Present the BAWAG Settlement to Court for Preliminary Approval

On September 8, 2006, Lead Plaintiffs presented the BAWAG settlement to Judge Lynch for preliminary approval and certification of the settlement class. If the settlement is preliminarily approved, notice explaining the deal in greater detail will thereafter be sent to Class members, who will have an opportunity to file any formal objections they may have before a final approval hearing is held by Judge Lynch sometime in the Fall. The timing of the distribution of the funds recovered in this settlement to Class members has not yet been determined. Click here to view the associated filings on our Lead Plaintiff Filings page.

June 5, 2006 - Lead Plaintiffs Announce Settlement With Austrian Bank BAWAG for Payment of at Least $108 Million in Cash and Cooperation Against Others Who Played Role in Refco Affair 

On June 5, 2006, RH Capital Associates LLC and Pacific Investment Management Company LLC, the institutional investors appointed by U.S. District Judge Gerard E. Lynch to serve as Lead Plaintiffs on behalf of investors victimized by the Refco affair, signed a settlement agreement with BAWAG P.S.K. Bank für Arbeit und Wirtschaft und Österreichische Postsparkasse Aktiengesellschaft, an Austrian bank that had been sued for securities fraud by Lead Plaintiffs. Pursuant to the agreement, BAWAG has agreed to pay to Lead Plaintiffs, on behalf of the Class, at least $108 million in cash, with the possibility of an additional payment of up to $32 million when BAWAG is sold in the coming months.

In addition to the cash payment(s), BAWAG has pledged to cooperate with Lead Plaintiffs as they pursue the Class’ claims against other current (and prospective) defendants in the consolidated securities class action.  Indeed, BAWAG began to assist Lead Plaintiffs before the settlement agreement was formally signed, making available for Lead Counsel’s review a large cache of documents referring to the various roles played by Refco insiders and Refco’s bankers, lawyers, and auditors.

The settlement resolves two categories of claims asserted against BAWAG in the Refco class action, namely, claims arising from Refco’s bond and stock offerings in 2004 and 2005, and claims arising out of the purchase of Refco securities in the open market between August 5, 2004 and October 17, 2005 . As part of the settlement, the Class’ claims against BAWAG will be released.

The settlement between Lead Plaintiffs and BAWAG is an integral part of a set of settlements recently reached between BAWAG and various parties, including Lead Plaintiffs, the United States Attorney for the Southern District of New York (“USAO”) and the Official Committee of Unsecured Creditors in the Refco bankruptcy proceedings. In order to facilitate BAWAG’s ability to achieve global resolution of its potential liability relative to Refco, Lead Plaintiffs have agreed that certain funds they may obtain from a restitution fund that the USAO is establishing for victims of the Refco debacle (and funded by BAWAG) will be credited as partial payment of BAWAG’s obligations under this agreement. The agreement specifically provides, however, that BAWAG remains absolutely obligated to make the payments to the Class required under the deal if, for any reason, the funds obtained through the restitution fund fall short of the required amounts.

This is the first settlement achieved for the Class in the Refco Securities Litigation. Lead Plaintiffs will continue to pursue the Class’ claims against the remaining defendants, which include several former Refco insiders (including former CEO Phillip Bennett), Refco’s former board of directors, Refco’s former auditor (Grant Thornton LLP), the investment banking concern that helped take Refco “public” in August 2005 (Thomas H. Lee Partners L.P. and related entities), and several investment banks that sold Refco stocks and bonds to public investors (including Goldman Sachs, Credit Suisse and Bank of America). Lead Plaintiffs are also evaluating the role and potential liability of other participants in the Refco scandal.

The attorneys who worked to achieve this settlement are partners Sean Coffey, Salvatore Graziano and John Browne and associate Jeremy Robinson of Bernstein Litowitz Berger & Grossmann LLP, and partners Stuart Grant, James Sabella, and Megan McIntyre and associates Christine Mackintosh and Jill Agro of Grant & Eisenhofer P.A. Their work prosecuting the Class’ claims against other defendants in the Refco debacle continues.

ATTORNEY ADVERTISING/DISCLAIMER

 

For Grant & Eisenhofer P.A.:

Stuart Grant

James Sabella

Megan McIntyre

Jonathan Margolis

Christine Mackintosh

For Bernstein Litowitz Berger & Grossmann LLP:

 Salvatore Graziano

John Browne

Jeremy Robinson

 

Information regarding the bar admissions of the attorneys at
Grant & Eisenhofer P.A.
and
Bernstein Litowitz Berger & Grossmann LLP
may be viewed via the links to the respective firms' websites.

 

Grant & Eisenhofer P.A.:
 

485 Lexington Avenue - 29th Floor
New York, NY  10017

Tel: 646.722.8500

Fax: 646.722.8501
www.gelaw.com

Bernstein Litowitz Berger & Grossmann LLP:
 
1285 Avenue of the Americas
New York, NY 10019
Tel: 212.554.1400
Fax: 212.554.1444
www.blbglaw.com

Key Developments

June 22, 2012 - Judge Rakoff Enters Supplemental Distribution Order

September 30, 2011 -
Judge Rakoff Enters Order Approving Payment of Eligible Claims-In-Process, Late Adjusted Claims, and Late Submitted Claim

May 2, 2011 -
Judge Rakoff Enters Order Approving Initial Distribution of Net Settlement Funds to Authorized Claimants

March 22, 2011 -
Judge Rakoff Approves Settlements with Grant Thornton LLP and Settling Officer Defendants

February 4, 2011 -
Lead Plaintiffs Submit Papers in Support of Final Approval of Settlements with Grant Thornton LLP and Settling Officer Defendants, and Lead Counsel Submit Papers in Support of Their Motion for Attorneys’ Fees and Expenses

November 12, 2010 -
Judge Rakoff Grants Preliminary Approval to Settlements with Grant Thornton LLP and Settling Officer Defendants

October 27, 2010 -
Judge Rakoff Approves Settlements with Audit Committee Defendants and THL Defendants and with Underwriter Defendants and approves Plan of Allocation

October 20, 2010 -
Lead Plaintiffs Submit Supplemental Papers in Support of Final Approval of Settlements with Audit Committee Defendants and THL Defendants and with Underwriter Defendants

October 18, 2010 -
Lead Plaintiffs Present Settlements with Grant Thornton LLP and with the Settling Officer Defendants to Court for Preliminary Approval

September 22, 2010 -
Lead Plaintiffs Submit Papers in Support of Final Approval of Settlements with Audit Committee Defendants and THL Defendants and with Underwriter Defendants, and Lead Counsel Submit Papers in Support of Their Motion for Attorneys’ Fees and Expenses

July 30, 2010 -
Judge Rakoff Grants Preliminary Approval to Settlements with Audit Committee and THL Defendants and with Underwriter Defendants and sets Settlement Hearing

April 20, 2010 - Lead Plaintiffs Present Settlement with Remaining Underwriter Defendants to the Court for Preliminary Approval

April 20, 2010 - Lead Plaintiffs Reach Partial Settlement with Remaining Underwriter Defendants for Payment of $49.5 Million in Cash, Bringing Total Settlement with the Underwriters to $53 Million in Cash

April 5, 2010 - Lead Plaintiffs Present Settlement with THL Defendants And Audit Committee Defendants to Court for Preliminary Approval

March 29, 2010 - - Lead Plaintiffs Reach Partial Settlement with THL Defendants And Audit Committee Defendants for Payment of at Least $130 Million in Cash


July 10, 2009 – Refco’s Attorney Convicted Of Securities Fraud For Role In Scheme To Defraud Investors

July 6, 2009 - Lead Plaintiffs File Brief In Support of Their Appeal From Dismissal of Securities Fraud Claims Against Joseph P. Collins and Mayer Brown LLP

May 29, 2009 - Lead Plaintiffs File Reply Memorandum In Further Support of Summary Judgment Motion Against Seven Investment Banks

May 11, 2009 – The criminal trial of Joseph P. Collins (Refco’s long term outside counsel and former senior partner at Mayer Brown LLP) is scheduled to commence in the Southern District of New York before the Honorable Leonard B. Sand and a jury.

April 16, 2009 – Lead Plaintiffs File Notice Of Appeal From Dismissal of Securities Fraud Claims Against Joseph P. Collins and Mayer Brown LLP

April 1, 2009 – Lead Plaintiffs File Partial Summary Judgment Motion Against Seven Investment Banks

March 17, 2009 - Judge Lynch Grants Motions To Dismiss Brought By Joseph P. Collins And Mayer Brown LLP; States That Supreme Court And Congress Have "Declined To Provide A Private Right Of Action For Victims Of Securities Fraud" Against Parties Who Allegedly Aided And Abetted The Fraud At Refco

January 15, 2009 - The U.S. Department of Justice Seeks Information Regarding the Impact of the Refco Fraud on its Victims

November 5, 2008 - Judge Lynch Grants Preliminary Approval to Partial Settlement with Defendant Sandler O'Neill & Partners, L.P.

October 27, 2008 - Lead Plaintiffs Present Settlement with Defendant Sandler O’Neill & Partners L.P. to Court for Preliminary Approval

August 11, 2008 - Lead Plaintiffs Announce $3.5 Million Partial Settlement with Junior Underwriter

August 7, 2008 - Former Refco Owner, CEO and President Tone Grant is Sentenced to Ten Years In Prison For His Role In The Refco Fraud

July 3, 2008 - Former Refco CEO Phillip Bennett is Sentenced to Sixteen Years In Prison For His Role In The Refco Fraud.

May 29, 2008 - Lead Plaintiffs Disclose Extensive Debriefings of Former Refco CEO Phillip Bennett.

April 17, 2008 - Tone Grant (CEO of Refco prior to Sept. 1998 and 50% owner of Refco until 2004) found guilty of conspiracy, securities fraud, wire fraud, bank fraud and money laundering by a jury in federal court in Manhattan.

March 26, 2008 - Judge Lynch Grants Preliminary Approval to Partial Settlement with Defendant Joseph J. Murphy.

March 24, 2008 - Following guilty pleas by Bennett and Trosten (see below), the criminal trial against Tone Grant (former CEO of Refco) commenced in federal court in Manhattan before the Honorable Naomi Rice Buchwald and a jury. If you are a victim of the Refco fraud who purchased stock in Refco's 2005 initial public offering and would be willing to talk with prosecutors in the Refco-related criminal proceedings, please contact the Office of the United States Attorney for the Southern District of New York at 212-637-2391.

February 29, 2008 - Lead Plaintiffs file Memorandum of Law in Opposition to the 144A Defendants' Motion to Dismiss the Second Amended Consolidated Class Action Complaint.

February 21, 2008 - Lead Plaintiffs Present Settlement with Defendant Joseph J. Murphy to Court for Preliminary Approval.

February 20, 2008 - Robert Trosten (former Executive V.P. and CFO of Refco) pleaded guilty to five counts of securities and related criminal charges in connection with his role in the collapse of Refco.

February 15, 2008 - Phillip Bennett (former President, CEO and Chairman of Refco and 50% owner of Refco) pleaded guilty to twenty counts of securities and related criminal charges in connection with his role in the collapse of Refco.

January 31, 2008 - Lead Plaintiffs Memorandum of Law in Opposition to the Motion to Dismiss of Joseph P. Collins and Mayer Brown LLP.

January 22, 2008 -
Judge Lynch Grants Preliminary Approval to Settlement with Defendant Dennis A. Klejna.

December 18, 2007 -
Lawyer Joseph P. Collins, a partner at Mayer Brown LLP and Refco's primary outside counsel, was indicted for his role in the Refco fraud and charged criminally with eleven counts of securities fraud and related charges. Click here to view the Indictment.

December 7, 2007 - Lead Plaintiffs Present Settlement with Defendant Dennis A. Klejna to Court for Preliminary Approval. Click here to view the associated filings on our Lead Plaintiff Filings page.

December 6, 2007 - Lead Plaintiffs Announce Settlement With Defendant Dennis A. Klejna for Payment of $7,600,000 and Cooperation Against Others Who Played Role in Refco Affair. Click here to view the associated filings on our Lead Plaintiff Filings page.  

December 3, 2007 - Lead Plaintiffs file Second Amended Consolidated Class Action Complaint. Click here to view Amended Complaint.

October 1, 2007 - Mayer Brown LLP and Joseph P. Collins Added as Named Defendants to the Refco, Inc. Securities Class Action. Click here to view Complaint.

June 29, 2007 - Judge Lynch Grants Final Approval to BAWAG Settlement. Click here to view Judge Lynch's Opinion.

May 31, 2007 - Judge Lynch Rejects Request by Audit Committee Defendants and Defendant Silverman to Reconsider his April 30, 2007 Opinion Sustaining Lead Plaintiffs' Fraud Claims Against Them.

April 30, 2007 - Judge Lynch Clears Way for Refco Class Action to Proceed; Denies Bulk of Defendants' Efforts to Dismiss Securities Claims.

March 5, 2007 - Judge Lynch Grants Preliminary Approval to BAWAG Settlement.

February 22, 2007 - Lead Plaintiffs Submit Revised BAWAG Settlement to Court for Preliminary Approval.

December 22, 2006 - Recent Developments Pertaining to Bankruptcy Proceedings.

September 15, 2006 - Lead Plaintiffs File Opposition to Defendants' Motions to Dismiss First Amended Consolidated Class Action Complaint.

September 8, 2006 - Lead Plaintiffs Present the BAWAG Settlement to Court for Preliminary Approval.

June 5, 2006 - Lead Plaintiffs Announce Settlement with Austrian Bank BAWAG for Payment of at Least $108 Million in Cash and Cooperation Against Others Who Played Role in Refco Affair. (See announcement at left.)

May 17, 2006 - Lead Plaintiffs File  Motion to Modify the PSLRA Stay to Permit Limited Document Discovery.

May 5, 2006 - Lead Plaintiffs File First Amended Consolidated Class Action Complaint.

April 3, 2006 - Lead Plaintiffs file Consolidated Class Action Complaint.

March 14, 2006 - Court Issues Injunction and Restraining Order Enjoining Bennett From Dissipating Any and All Proceeds Obtained From His Sale of Shares in the Refco IPO.

February 3, 2006 - Court Appoints RH Capital Associates LLC and Pacific Investment Management Company LLC as Co-Lead Plaintiffs and BLB&G and G&E as Co-Lead Counsel for the Class.


ATTORNEY ADVERTISING/DISCLAIMERR

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