If nothing else, creditors of Refco are tenacious. With increasingly likelihood that they will be left with little once the dust settles, the creditors committee is aggressively moving to try to collect on what its members are owed. Now, once you consider that Refco shares that issued $22 apiece are down to 56 cents, and bankruptcy is still being debated, the logical option would be to sue anyone else in sight; in this case, it’s the deep-pocketed likes of eight investment banks that were underwriters for the Refco initial public offering. In a filing in U.S. Bankruptcy Court for the Southern District of New York, the New York Post reports, the creditors have sued Goldman Sachs, Credit Suisse First Boston, Deutsche Bank, JPMorgan, Sandler O’Neill & Partners, Bank of America, HSBC and Merrill Lynch for their role in allowing the fraud allegedly masterminded by former Refco CEO Phillip Bennett to occur. The underwriters, says the filing, “either knew or were reckless or negligent in not discovering” the hidden $430 million loss in advance of the IPO.
