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Key Developments

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.

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.

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.

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

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.

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

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. 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. 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.

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.

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.

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

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. 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.

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. Click here to view all Court Orders.

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.

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. Click here to view Lead Plaintiffs' Memorandum.

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.