Ex-Refco boss charged with fraud
Phillip Bennett, the UK-born former CEO of the futures and derivatives trading firm Refco, has been arrested and charged with fraud by authorities in New York. The move follows the disclosure that he had hidden debts of $430 million prior to Refco's recent IPO.
Refco's shares slumped again on the back of Mr Bennett's arrest, and the value of the stock has now declined by around 50% since the discovery of the missing funds. In charging Mr Bennett with fraud, US attorney Michael Garcia alleges that he was attempting to make Refco look stronger than it was in reality prior to the IPO, which raised some $583 million. Some reports suggested that the authorities moved to arrest Mr Bennett just two days after he was suspended by Refco because it was feared he would flee the US for Europe. Mr Bennett's precise motives for hiding the debts remain unclear, though a report in the Independent newspaper in London suggested that he may have hoped to boost the value of his own stock by concealing the trading losses. If convicted, Mr Bennett faces a jail term of up to 20 years.
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