Refco Account Security

S&P analyst on Bloomberg TV just said it is likely refco will need to file for bankruptcy if any creditors pull out saying if you strip down the company's assets you end up with a negative balance sheet

 

a simple fact is, the Us Attny said the amount in question "fluctuates". Do you think bad trades flucuate in your favor?

 

The noggins at LTCM thought so, just keep averaging!

 

I agree with the previous poster though ... once you see something incongruous, you need to limit your risk ... let the billion dollar companies state publicaly that they have kept the agreements in place - and their funds.

I still feel that anytime a mistake like this comes to light in a public company it reflects very poorly on the management structure of the organization and calls into question the basis of the business.

Like I said earlier this is a sad day for a scrappy company that survived where others in the industry did not..... It will actually be a problem (temporarily) for the entire commodities related ecosystem in my opinion.

...by the way, I have no postions in refco or any related security.

 

Magin call coming?

According to WSJ, the source of the $430MM that Bennett repaid to Refco was a loan he took out using his refco shares as collateral.

Let's do some math, shall we? Bennett owns 34% of refco. As of the end of trading yesterday, Refco's market cap is 1.38B according to Yahoo Finance. $1.38B x 34% = $469MM -- getting close to the $430MM loan.

This means whichever sucker bank made the loan to Bennett must be sweating now. It also means if the bank loses its nerve, there's another wave of selling coming.

Pre-market trade this morning has Refco stock trading w/ a $7.90 bid.

I must confess this is very entertaining.

 

Btw, one wonders aforementioned sucker bank had any idea of the goings on at Refco when it decides to make a $430MM "secured" loan to Bennett

 

Refco off another 25%.

Are all those bulls still so comfortable?

 

Oh don't worry Apex Capital says they have 1B in Refco LLC.

He even thinks that segregated client funds are an asset of RFX.

This company has as many LLCs as Mr. Apex has answers.

I hope none of you have client money with this cockroach. Seems to me you had fair warning there's a problem. You better be praying you can get it for them if they ask.

Truly funny.

Geo.

 

are any holders of refco likely to get a margin call?

 

Halted again. This is a train wreck in slow motion.