Refco ex-CEO charged with fraud, stock trading suspended

10/13/05 - newratings.com

NEW YORK, October 13 (newratings.com) – Refco Inc’s (RFX) former CEO, Phillip Bennett, has been charged with securities fraud. Refco's share price declined before trading in the company’s stock was halted on Thursday.

The federal prosecutor for the Southern District of New York, Michael Garcia, charged Phillip Bennett with securities fraud for hiding $430 million he had borrowed from Refco to invest in a privately-held company, Refco Group, controlled by him. Although Phillip Bennett repaid the debt, federal prosecutors said that he had concealed the debt to inflate Refco's value during the company’s IPO on August 10. Federal prosecutor, Michael Garcia, noted that Refco's share price plunged 45% when the debt was made public. Refco has become one of the largest clearing firms for derivatives under the leadership of Phillip Bennett. Refco's share price fell $2.85 to $8 in pre-market trading on the Inet electronic trading network on Thursday.