I think what you are suggesting is wholly inaccurate. From all accounts, VN paid Refco every red penny. I don't think he would have had to go through the humiliating exercise of selling his silver collection if he got off scott free and left Refco with the hit as you are suggesting.
I'll be very surprised if the segregated funds take a hit. In times of such dire competition with LIFFE, EUREX et al, the entire Chicago futures industry has an incredibly strong vested interest in making sure that none of the segregated funds take a loss.
A buddy of mine at the derivatives desk of a very large foreign investment bank took the other side of about HALF of VN's naked put liquidation that occured on that Tuesday morning. As a result, he made the desk $45 million dollars, his greatest haul ever and 9 times greater than his previous monster trade. Not bad for a guy that was only about 35 years old at the time.
One of the best posts so far on all of ET today. All of the REFCO bashers and "Gloom & Doomers" here on ET as well as on CNBC and other parts of the media have conveniently missed this very significant point, and in my humble opinion it's a whole lot more significant than one can even begin to imagine.
The Wall Street Journal reported late Friday that senior regulators at the Chicago Mercantile Exchange and the Commodity Futures Trading Commission asked Goldman Sachs ) and other banks to buy Refco to calm fears among investors, lenders and trading partners who have become increasingly concerned about the future of the company. Goldman, which was appointed as Refco's advisor this week, ISN'T INTERESTED, the newspaper added, citing a person familiar with the company's thinking.
Wow. I'd like to meet this buddy of yours and hear that war story. Come to think of it, I'm sure Victor would too.
From what I hear, the trading desk was virtually paralyzed that morning and part of the firm was dealing with a sizeable option "hickie" that occured over in London. Kind of like a "Deer in Headlights" atmosphere. In any event, the mathematical mind of my buddy who initially cut his teeth at Susquehanna as a young buck went into overdrive and started hitting every bid that the liquadating broker presented. He said that it was almost as if he couldn't believe what he was hearing coming from his floor broker . . . that there was this guy in the option crowd of the S&P futures bidding for HUGE size. The "Vulture Trade" was on! My buddy sold thousands and thousands of these S&P put options that were so juiced by vol that he would have made a fortune if the market just traded sideways for a day or two. As luck would have it, the market bottomed in a "V" like fashion and he made an absolute fortune. He retired about 6 months later, primarily because he was so burnt-out from trading and facilitating customer orders at the I-Bank. Believe it or not, the he and VN lived less than 20 miles away from each other!