NEW YORK, Oct. 12, 2005 (PRIMEZONE) -- The Pomerantz Firm (www.pomerantzlaw.com) has filed a class action complaint in the United States District Court, Southern District of New York, against Refco, Inc. ("Refco" or the "Company") (NYSE:RFX), two of its officers, certain underwriters and the Company's outside auditor. The class action was filed on behalf of public investors who purchased the common stock of Refco during the period of August 11, 2005 and October 7, 2005, inclusive (the "Class Period"). It includes those investors who purchased the common stock of Refco pursuant and/or traceable to the Company's initial public offering on August 11, 2005 ("IPO").
Refco provides execution and clearing services for exchange traded derivatives and brokerage services in the fixed income and foreign exchange markets in the United States, Bermuda, and the United Kingdom. The company is headquartered in New York.
Refco went public via an initial public offering on August 11, 2005. Just nine weeks later, on October 10, 2005, Refco revealed that defendant Phillip R. Bennett, its CEO and Chairman and controlling shareholder, was being placed on a leave of absence and that the company had made a related-party loan of $430 million to an entity controlled by Bennett. Refco disclosed that the "receivable was the result of the assumption by an entity controlled by Mr. Bennett of certain historical obligations owed by unrelated third parties to the Company, which may have been uncollectible." The Company also acknowledged that based on the undisclosed related party transaction, its prior financial statements for the fiscal years ending 2002 through 2005 and the quarter ended May 31, 2005 should not be relied upon. On October 11, 2005, the Company issued another press release stating that "the Company believes that the receivable consisted in major part of uncollectible historical obligations owed by unrelated third parties to the company, that arose as far back as at least 1998." The related party loan was not disclosed in the Registration Statement.
As a result of the October 10 revelations, the Company's stock price fell $12.96 per share, or over 45%, to close at $15.60 per share on October 10, 2005. The IPO price was $22.00.
On October 12, 2005, federal prosecutors arrested Phillip R. Bennett, charging him with one count of securities fraud. According to the criminal complaint, Bennett "hid from investors in the August 2005 initial public offering of stock in Refco the existence of hundreds of millions of dollars of related party transactions between Refco and a company controlled by Bennett, including by causing Refco to file a false and fraudulent S-1 registration statement..."
If you purchased the securities of Refco during the Class Period, you have until December 12, 2005 to ask the Court to appoint you as lead plaintiff for the Class. Lead plaintiffs must meet certain legal requirements. Shareholders outside the United States may also join the action, regardless of where they live or which exchange was used to purchase the securities. If you wish to review a copy of the Complaint, to discuss this action, or have any questions, please contact Teresa L. Webb (tlwebb@pomlaw.com) or Carolyn S. Moskowitz (csmoskowitz@pomlaw.com) of the Pomerantz Firm at 888.476.6529 (or 888.4-POMLAW), toll free. Those who inquire by e-mail are encouraged to include their mailing address and telephone number.
The Pomerantz Firm, which has offices in New York, Chicago and Washington, D.C., is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, the Pomerantz Firm pioneered the field of securities class actions. Today, more than 50 years later, the Pomerantz Firm continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members.