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Refco Settlement – And Unsettlement
In what is being called one of the largest bankruptcy-related settlements in many a year, PlusFunds Group, which runs the Sphinx Managed Futures Fund, has agreed to pay $263 million to creditors of Refco.
In what is being called one of the largest bankruptcy-related settlements in many a year, PlusFunds Group, which runs the Sphinx Managed Futures Fund, has agreed to pay $263 million to creditors of Refco.In December, the creditors took advantage of a provision of the federal bankruptcy law allowing them to sue for money transferred out of a fund in this case to an offshore Refco fund within 90 days of filing for bankruptcy. PlusFunds, a client of the collapsed future broker, barely escaped losing its pants when Refco fell apart last October by transferring its $312 million out a day before the broker filed for bankruptcy. Creditors, according to the Associated Press, were bent on discrediting testimony by an expert hired by Sphinx that would have argued that, since the Refco Capital Markets unit was solvent at the time of the bankruptcy, Refco was lawfully able to transfer the funds, and therefore the creditors would have no claim. Meanwhile, some 17,000 investors in another division, RefcoFX, have been going through some unsettling times of their own. The New York Post reports that because Refcos woes led to a companywide asset freeze, the RefcoFX clients have been burned as well, and cannot touch their money even though they were assured otherwise. According to the Post, shortly after the Refco scandal broke, a company rep wrote one RefcoFX client, ...Please be assured that your funds are in no way affected by this recent news, are held safely with RefcoFX at Bank of America, and are available to trade or withdraw anytime. Famous last words.