Theft? Please state specifically what was stolen from REFCO. The State Attorney General would be most interested.
Apex, I think that you have raised a valid point. I agree with you that there is an important difference between theft and fraud. Thieves are less sophisticated criminals who simply take our property from us. But frauds are more sophisticated criminals, because they prey on our weaknesses and deceive us willingly to hand over our property. I can see how a bunch of frauds might be offended by a suggestion that they were also thieves. I really never intended to suggest that the Refco frauds were also thieves. I don't know if they were. I usually think of fraud and theft as almost the same thing, but you correctly raised the distinction as an issue. I think you misunderstood what I was trying to say. I apologize if anybody involved in the Refco fraud was offended by having misunderstood me.
what I would like to know is A: if REFCO had not gone through the IPO and private buyout prior to this ... would anyone have been wise to what was going on behind the scenes, and if so would it have made any difference ? in other words ... does becoming a public company place extra "faith" on how that company is run as opposed to a privately held company ? oh ... I second the "close this thread" idea or at least see if we can change the name on the thread to something else.
According to the news sources and press release on Monday when the Refco problem first become news, it seems that Refco discovered the problem itself, through an "internal review". Now, it is consistent with TH Lee's philosophy of disclosure, a lesser firm would have tried to coverup (i.e., Enron and MCI), and would have caused (probably) the complete destruction of the entire company. By going disclosing, and immediately distance the firm from Bennett, this gave the firm a fighting chance. However, with the recent corporate scandals, the markets are not in a forgiving mood (and nor should they, IMO). I doubt this would come to light if Refco remained private. I was partner, and a member of the executive committee at a private firm a couple of years ago, and the weekly exec committee meetings focused mostly on client and operations, not on the financing transactions that the CFO have to do. Once in a blue moon, I ask about the servicing of sub-ordinated debts, but that's about it. The atmosphere was a relaxed and trusting one. I trust the CFO to do his job in keeping the corproate afloat, having the cash for operations, and have audited numbers (simple audits for private entities), and like wise, he trusts me in running the daily operations, the customer servicing, and resolving any client problems. The level of scrutiny is much less with a private firm. I could have gotten away with far more than I would have be able to at a public firm (an ibank that I was a part of before). For instance, if I want to check with compliance at the private firm, I would just walk over to the compliance officer's office and strike up a conversation, no records, no written, nothing really. I could have claimed that the conversation never happened if I wanted to cover my tracks since there was no record. However, if I wanted a compliance officer in an ibank to see if what I am going to do is compliant. Here comes the documentation, the official compliance memorandum, the official written description of what I am going to do, and signoff from the compliance person, the head of the business unit and me, and then the follow-up and documentation after the trade, the checks and balances is much more structured in a public firm.
I suspect if every public firm was vetted for 100% compliance, you'd find that a very LARGE number would fail.
I'm thinking any money refco and/or it's executives gained from their IPO was at the expense of the investors - ie, theft. The committed fraud to financialy benefit at the expense of some else. I think it's not too much of a stretch to consider that theft to some degree. And let's not forget that these guy have previously used customers "segregated" accounts as a source of free loans to the company. again, i would consider that theft.
IB is a fine firm with some very good people and overall for most people is the best on the street. to say customer service is just fine means that your dealings with them must invole exteremely simple requests.
because on this board people think in very personal terms. if the individual had an account at some other firm, he probably would have posted their name. all that said the question is legitimate. at this moment. it would probably be more informative if it was discussed in a general way e.g. what clues are there to determine if fraud is going on. the question cannot be really answered because this type of concealment is likely to fool auditors and internal control people.