A lawsuit seeking $1 billion in damages is charging a host of auditors and underwriters for Refco with failing to discover fraud at the collapsed broker sooner by ignoring red flags in a number of documents. Filed in U.S. District Court for the Southern District of New York, plaintiffs RH Capital Associates, PIMCO and the PIMCO High Yield Fund accuse Refco, several of its officers, and companies such as Credit Suisse Group, Bank of America Corp., Thomas H. Lee Partners, Merrill Lynch and Grant Thornton, among many others, with ignoring questionable loans. In one instance, according to the complaint, Grant Thornton allegedly did not question a $335 million loan Refco made only days before the end a quarter – but should have.

In other Refco-related news, the Securities and Exchange Commission has charged three former brokers with Refco Securities and three other individuals for an alleged short-selling scam that used accounts at Refco to sink stock prices of Pennsylvania software company Sedona Corp. Further, U.S. Bankruptcy Judge Robert Drain has approved the payment of about $4.1 million in incentive bonuses and severance to Refco employees, but refused to do the same for 14 employees of Refco Capital Markets. Finally, Sberbank, Russia's largest bank, has filed a complaint with a federal court in Manhattan to force Refco to pay it $122 million in collateral that a British court rules belongs to it.