Thursday, October 13, 2005


Liquidity Dries Up For Refco, Stock Trade Halted

The situation at Refco is getting more dire by the day. "Refco Inc. said on Thursday that its Refco Capital Markets Ltd. unit doesn't have enough liquidity to keep operating as the futures broker reels in the midst of a scandal. Refco announced a 15-day halt on customer withdrawals from the division to protect the value of the enterprise."

"Refco stock slumped 27% to $7.90 on Thursday morning before trading was halted. The shares have lost more than two-thirds of their value this week."

"Refco also said on Thursday that regulatory capital and excess regulatory capital at Refco LLC, its regulated Futures Commission Merchant, and Refco Securities LLC, its regulated broker dealer, have been substantially unaffected by the scandal. 'The business at these subsidiaries is being conducted in the ordinary course including customer deposit and withdrawal of segregated funds,' the company said."

"Refco, Inc. 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. It executes and clears customers'' orders for exchange-traded derivatives."

"It provides these prime brokerage services primarily in the U.S. Treasury securities, foreign exchange, and non-dollar fixed income markets. As of April 8, 2005, the company served approximately 200,000 customer accounts from its 23 locations in 14 countries. Its customers include corporations, government agencies, hedge funds, managed futures funds, pension funds, financial institutions, retail clients, and professional traders."

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