Refco creditors say underwriters may be negligent
Fri Mar 3, 2006am ET
NEW YORK, March 2 (Reuters) - Goldman Sachs (GS.N: Quote, Profile, Research), Bank of America Corp. (BAC.N: Quote, Profile, Research), Credit Suisse Group (CSGN.VX: Quote, Profile, Research), and other banks may have been negligent when they underwrote an initial offering for Refco Inc. just months before the company filed for bankruptcy, creditors said in a filing on Thursday.
Refco's official creditors committee asked U.S. Bankruptcy Court for the right to seek documents pertaining to the August 2005 share offering, as well as information pertaining to Refco's leveraged buyout in June 2004.
Refco (RFXCQ.PK: Quote, Profile, Research) went public in August 2005, and filed for bankruptcy just two months later, after an accounting scandal made customers lose faith in the broker.
Federal prosecutors charged the company's former chief executive, Phillip Bennett, with eight counts of fraud, conspiracy, and other charges related to the accounting irregularities. Bennett pleaded not guilty to the charges in November.
In Thursday's filing, Refco's creditors said they may have claims for negligence and aiding and abetting fraud, among other possible complaints, for parties involved in the IPO and LBO.
Refco shareholders have already sued the broker's underwriters.
A spokeswoman for Credit Suisse declined to comment. Spokespeople for Bank of America and Goldman Sachs were not immediately available for comment.
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