Posted on 10/10/2005 4:02:18 PM PDT by HAL9000
NEW YORK (AP) -- One of the world's biggest commodities brokerages Monday said its chief executive took an indefinite leave of absence after the company discovered he had secretly transferred $430 million of the company's assets to a firm he controlled.Refco Inc. also said its financial statements since 2002 "should no longer be relied upon" and that it would delay filing its quarterly earnings release originally slated for next week.
The news sent Refco shares plunging $12.96, or 45 percent, to close at $15.60 on the New York Stock Exchange.
Refco, which became a publicly traded company in August, said Phillip R. Bennett has repaid the money - debts owed the company - in cash, plus interest. It isn't clear what motive Bennett may have had for the tran saction, which Refco said involved Refco Global Holdings Inc., a company Bennett set up to hold his personal stake in Refco Inc. stock.
New York-based Refco declined to be specific about the money Bennett had transferred, but referred to it in a news release as "certain historical obligations owed by unrelated third parties ... which may have been uncollectible," implying that at least some of the assets were bad debts.
Bennett took a leave at the request of Refco's board. Also taking a leave was Santo Maggio, the head of the brokerage's securities arm who company officials said knew of Bennett's dealings.
The company promoted three longtime executives to fill both positions on a permanent basis. William Sexton - an executive vice president who in September had announced plans to retire - was appointed to stay on as CEO. Joseph J. Murphy will become president and take over one Maggio's posts as head of Refco Capital Markets. Peter McCarthy will take over Maggio's other title, as president of Refco Securities.
Bennett referred a telephone call for comment to his lawyer, who declined comment.
Sexton and Scott Schoen, a Thomas H. Lee Partners executive who sits on Refco's board, said in an interview that no one knew Bennett's investment fund owed the company the money until late last week.
Schoen is heading a new executive committee of Refco's board, which is investigating the matter. Thomas H. Lee, a private-equity firm, helped Refco go public, and it remains Refco's largest shareholder.
Time does not permit a lengthier post at this time. But trust me, REFCO goes far deeper than just the cattle trades.
CT
Let me guess, the CEO gets 150 million and the investors get screwed. Isn't that the usual script?
We have a winner.
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