Judge Granted Temporary Restraining Order After David Scott Aggressively Protected Those Harmed by Defendants’ Alleged Conduct

Scott+Scott, LLC (, represents major institutional and individual investors in the Refco securities class action filed on October 11, 2005 at client request, in the United States District Court for the Southern District of New York regarding the alleged Refco, Inc. (“Refco”) fraud (OTC: RFXCQ.PK) (Case No. 1:05-cv-08663-DC). On Friday, the Scott firm filed a more comprehensive and updated complaint following weeks of litigation developments. Refco securities purchasers between August 11, 2005, and October 18, 2005, inclusive (the “Class Period”) are putative class members, but the firm encourages anyone who purchased these securities or is facing other related Refco problems to contact the firm to discuss their rights existing under United States law.
If you wish to discuss this action or have questions concerning your rights, you may contact the firm for more information. Scott+Scott will provide class members with case materials, answer all questions regarding participation and assist with other services the firm provides. There is no cost or fee to class members. Contact Scott+Scott partner Neil Rothstein ([email protected], 800/332-2259, ext. 22 or cell 619/251-0887). Institutional Investors may also contact the firm at [email protected] During morning hours on the east coast, you can also contact the firm at 800/404-7770.
Scott+Scott’s original complaint alleges that during the Class Period, Refco and certain of its officers and directors, including former CEO Phillip R. Bennett (“Bennett”), as well as Refco’s IPO underwriters and independent auditor, violated provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934, by issuing a false and misleading Prospectus to investors as well as making false and misleading statements during the Class Period. It is alleged that because of these securities law violations, investors were deceived out of over a billion dollars while Bennett personally made off with over $111 million. Scott+Scott sought to secure Bennett’s improperly obtained assets for the benefit of investors who, because of the Refco bankruptcy, might be unable to look to the insolvent Company for relief.
On October 31, 2005, based on a motion filed by David Scott of Scott+Scott on behalf of the investor Class, as well as discussions with special counsel for plaintiff and Bennett, the Court entered a Temporary Restraining Order (“TRO”) to freeze assets that Bennett obtained from his Refco stock sales in the Company’s IPO. The TRO is in effect pending an Order to Show Cause hearing scheduled for December 1, 2005, at which time the Court will determine whether or not a more permanent restraining order should be issued maintaining the asset-freeze injunction throughout the pendency of the litigation. Refco filed for bankruptcy protection on October 17, 2005.
The complaint, filed on Friday, includes the defendants: Bennett, Sherer, Breitman, Harkins, Jaekel, Lee, O’Kelley, Schoen, and Gantcher (all individual defendants), plus Credit Suisse First Boston, Goldman, Sach’s & Co., Grant Thornton, LLP, Banc of America Securities, LLC, Merrill Lynch, Pierce Fenner & Smith Inc., Deutsche Bank Securities Inc., J.P. Morgan Securities, Inc., Sandler O’Neill & Partners, L.P., HSBC Securities (USA) Inc., William Blair & Company, LLC, Harris Nesbitt Corp., CMG Institutional Trading LLC, Samuel A. Ramirez & Company, Inc. Muriel Siebert & CO. Inc., The Williams Capital Group, LP, Utendahl Capital Partners, L.P., Liberty Corner Capital, and Refco Group Holdings. Refco itself is not a named party.
On October 12, 2005, defendant Bennett was arrested and charged by federal prosecutors with securities fraud. Thereafter, Scott+Scott sought the Temporary Retraining Order of the $111 million and succeeded. The counts now pled for the securities violations include 1) untrue material facts stated in the 2005 initial public offering; 2) that the individual defendants and underwriter defendants owed the plaintiffs the duty to make reasonable investigations of the statements made in the Prospectus/Registration Statement; 3) that the individual defendants by reason of their authority disseminated false statements knowingly or recklessly and the statements were material; and 4) that all defendants had the duty for preparing accurate press releases, which were in fact false (all issues raised above are allegations in the Complaint). As new information materializes on a daily basis, Scott+Scott will continue to update.
Refco received approval from the U.S. Bankruptcy Court for its sale of Refco’s last viable business unit to Man Financial Inc., a wholly owned subsidiary of Man Group plc (“Man”), for $282 million in cash and approximately $41 million of assumed liabilities and other considerations. Additionally, Bennett, the former chief executive of Refco Inc., was charged with engaging in a conspiracy that caused Refco to sell $583 million in stock to the public based on “false and fraudulent” statements of its finances. This was stated pursuant to an indictment.
The Man Group, a financial services company known in part as a hedge fund entity, currently has as its Chief Executive Officer Stanley Fink who previously worked for Arthur Anderson. During the same month of Refco’s IPO, Man was sued by Clifden Futures, LLC, for misappropriation of funds and breach of fiduciary duties. Man was chosen in a 21 hour auction in which it has been contended that other bidders offered almost three times that which was accepted. Refco’s creditors still have the ability to file objections regarding Refco, LLC’s separate Chapter 7 bankruptcy filing. Man Financial will take control of Refco’s seats on various commodities markets (including New York and Chicago’s Mercantile Exchanges and Boards of Trade). Further, if Mann is able to liquidate Refco, remaining customer accounts will be transferred over in perhaps a matter of days.
The plaintiff is represented by Scott+Scott, LLC, which has significant experience in prosecuting investor class actions. It has been lead counsel and is currently lead counsel in such cases as the General Motors Employee Benefits Case, Northwestern Energy, Halliburton, Sprint, Royal Dutch/Shell Petroleum ERISA Litigation, the Mattel Litigation, Emulex, ImClone and many more. The firm dedicates itself to client communication and satisfaction and currently is litigating major securities, antitrust and employee retirement plan actions throughout the United States. The firm represents pension funds, charities, foundations, individuals and other entities worldwide. Cases currently being litigated and/or investigated by Scott+Scott, LLC include: the Guidant Litigation; Boston Scientific Corp.; HCA; Novellus, Stone Energy; Packeteer Inc.; Mills Corp; International Rectifier Corp.; Motive; Pegasus; Blockbuster; Emergent, among others.

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