Refco Inc.

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Refco Inc. was a $4 billion commodities and futures trading company that suddenly melted down in October 2005 after its CEO revealed he had hidden a $430 million debt to the company.
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Refco's assets were sold one month later to Man Financial - now MF Global - for $282 million in cash and $41 million in liabilities.[1]


Refco filed for bankruptcy on October 2005, one week after it was revealed that former chairman and CEO Phillip R. Bennett[2] had covered up $430 million in customer losses impacting the company since the late 1990s. Bennett hid the losses from auditors and investors by arranging regular multiple transactions between related Refco companies.

Well-known investment company Thomas H. Lee Partners had bought a 38 percent stake in Refco in 2004 for $500 million as Refco was preparing for its IPO the following year.[3] That offering, in August of 2005 just two months before the company collapsed, saw Refco shares rise 25 percent on the first day's trading.

Bennett and former Refco CFO Robert Trosten both pled guilty in federal court in February 2008 to fraud charges stemming from the collapse of Refco. Bennett pleaded guilty in a New York city federal court to 20 counts of conspiracy and fraud two-and-a-half years after his arrest. Prosecutors said losses connected to the fraud topped $1.5 billion. He plead guilty in February 2008 and was sentenced to 16 years in prison in July 2008.[4] [5] Barely a month before it sank, Refco announced it had completed its $208 million cash purchase of brokerage firm Cargill Investor Services. It was to be rebranded under the Refco Investment Services banner.

An accountant who'd been working for Refco less than two months discovered the fraud in August 2005 when he noticed abnormally large interest payments being made to Refco on debt servicing.[6]

Neither Refco's auditor, Grant Thornton LLP, nor its IPO underwriters Credit Suisse, Goldman Sachs and Bank of America picked up on Bennett's $430 million concealment.[7]

Refco was Hillary Clinton's broker during her famously profitable 10-month period of rookie cattle-futures trading in 1978-79, when she turned an initial $1,000 into a profit of over $60,000.[8]

Former Refco president Tone Grant, 64, was found guilty in federal court on Apr. 18, 2008 of five criminal counts related to the scheme and faced a possible sentence of life in prison.[9] Grant was alleged to have hidden losses topping $2.4 billion.[10] On October 30, 2008, Grant reported to the US Federal prison camp in Duluth, Minnesota to begin serving a 10-year sentence. He died while serving his sentence in January 2015 at the age of 70.[11]

On July 11 2009, Joseph Collins, Refco Inc.’s former outside lawyer, was convicted by a federal jury of helping Chief Executive Officer Phillip Bennett and other executives defraud investors of $2.4 billion.[12]


  1. Court Approves Man-Refco Sale. HedgeWorld.
  2. Inside the Shadowy World of Phillip R. Bennett. Daily Telegraph (London).
  3. A lingering question about Refco. Houston's Clear Thinkers.
  4. Ex-Refco chief plans appeal of prison sentence. Reuters.
  5. British Brokerage Boss is Jailed for 'Depraved' Fraud. The Guardian.
  6. Mystery at Refco: How Could Such a Huge Debt Stay Hidden?. New York Times.
  7. Refco: The Reckoning. Business Week.
  8. Hillary Clinton Futures Trades Detailed. Washington Post.
  9. Ex-Refco Boss Guilty of Fraud in Losses Scam. Reuters.
  10. Refco's Tone Grant Begins 10-Year Sentence for Fraud. Bloomberg News.
  11. Hillary Clinton Futures Trades Detailed. Washington Post.
  12. Tone Grant, Refco Ex-President Serving 10 Years, Dies. Bloomberg.