Cases

In re Refco, Inc. Securities Litigation

http://refcosecuritieslitigation.com/

Court: United States District Court, Southern District of New York
Case Number: 05-cv-8626
Judge: Hon. Jed S. Rakoff
Class Period: 07/ 1/2004 - 10/17/2005
Case Contacts: John C. Browne, Salvatore J. Graziano, Jeremy P. Robinson

Securities fraud class action on behalf of persons and entities who purchased or acquired the securities of Refco, Inc. ("Refco" or the "Company") during the period from July 1, 2004 through October 17, 2005.

The lawsuit arises from the revelation that Refco, a once prominent brokerage, had for years secreted amounts ranging from $300 million to $970 million of uncollectible receivables with a related entity controlled by Phillip Bennett, the Company's Chairman and Chief Executive Officer. This revelation caused the stunning collapse of the Company a mere two months after its August 10, 2005 initial public offering of common stock, and only fourteen months after its issuance of 9% Senior Subordinated Notes due 2012.  Refco has filed one of the largest bankruptcies in U.S. history as a result.

Multiple settlements have been achieved by Lead Plaintiffs in the action resulting in a total recovery of $367.3 million for the benefit of the settlement class. In addition, Lead Plaintiffs have obtained more than $40 million in restitution funds  from the United States government for the benefit of the class resulting in a total recovery for the class of over $407 million.

Below is a summary of the most recent events of interest in the case.  More detailed information can be found at http://www.refcosecuritieslitigation.com/.

March 22, 2011 - Judge Rakoff Approves Settlements with Grant Thornton LLP and Settling Officer Defendants

On March 22, 2011, following a Settlement Hearing on March 11, 2011, the Honorable Jed S. Rakoff entered orders granting final approval to the settlements reached with defendant Grant Thornton LLP and with defendants Joseph J. Murphy, Dennis A. Klejna and William M. Sexton (the "Settling Officer Defendants"), which together provided for an additional payment to the Settlement Class of $25.3 million.  Judge Rakoff also certified the Settlement Class as to these defendants, authorized the application of the previously approved Plan of Allocation to the proceeds of these settlements, and approved Lead Counsel's motion for attorneys' fees and expenses.  Click here to view the related Judgments and Court Orders. 

Approval of these settlements concludes the litigation - unless a petition for certiorari filed by Lead Plaintiffs and pending in the U.S. Supreme Court is granted, in which case the litigation will resume against two other defendants against whom claims were previously dismissed.

February 4, 2011 - Lead Plaintiffs Submit Papers in Support of Final Approval of Settlements with Grant Thornton LLP and Settling Officer Defendants, and Lead Counsel Submit Papers in Support of Their Motion for Attorneys' Fees and Expenses

On February 4, 2011, Lead Plaintiffs filed papers with the Court in support of final approval of the proposed settlements with Grant Thornton LLP and with Joseph J. Murphy, Dennis A. Klejna and William M. Sexton (the "Settling Officer Defendants"), authorization to apply the previously approved Plan of Allocation of the settlement proceeds to these additional settlements, and final certification of the settlement class as to these defendants.  Lead Counsel also filed papers in support of their motion for attorneys' fees and reimbursement of expenses. Click here to view the associated filings on the Case Documents page. Judge Rakoff will consider the motions at the Settlement Hearing to be held on March 11, 2011 at 4:00 p.m. 

November 12, 2010 - Judge Rakoff Grants Preliminary Approval to Settlements with Grant Thornton LLP and Settling Officer Defendants

On November 12, 2010, the Honorable Jed S. Rakoff granted preliminary approval to settlements reached between Lead Plaintiffs and Refco's former auditor, Grant Thornton LLP and between Lead Plaintiffs and Joseph J. Murphy, Dennis A. Klejna and William M. Sexton (the "Settling Officers Defendants"), providing for total payments of $25,300,000 for the benefit of the Settlement Class.  Judge Rakoff also preliminarily certified a settlement class as to these defendants and approved the distribution of notice to class members concerning these settlements. 

Judge Rakoff scheduled a hearing (the "Settlement Hearing") for March 11, 2011 at 4:00 p.m. at the United States Courthouse, 500 Pearl Street, New York, NY 10007. The purpose of the Settlement Hearing will be to determine, among other things, whether the proposed settlements are fair, reasonable and adequate and should be approved by the Court and whether the plaintiffs' attorneys' application for an award of attorneys' fees and reimbursement of litigation expenses should be granted.

If you purchased or otherwise acquired Refco Group Ltd., LLC/Refco Finance Inc. 9% Senior Subordinated Notes due 2012 (CUSIP Nos. 75866HAA5 and/or 75866HAC1) and/or common stock of Refco (CUSIP No. 75866G109) during the period July 1, 2004 through and including October 17, 2005, you may be eligible to participate in the settlements and your rights may be affected.

PLEASE NOTE THE FOLLOWING KEY DATES WITH RESPECT TO THESE SETTLEMENTS:

          Deadline for Filing a Proof of Claim:  March 15, 2011
          Deadline for Requesting Exclusion:  February 19, 2011
          Deadline for Objections:                      February 19, 2011
          Settlement Hearing:                              March 11, 2011

For additional important information about these settlements and copies of the Notice, Court-approved Plan of Allocation, and Proof of Claim form, please visit the Refco Securities Litigation website at www.refcosecuritieslitigation.com.

PLEASE NOTE, if you previously submitted a proof of claim form in connection with the earlier approved settlements in this action, do not submit another claim form.  Your earlier claim will be considered for participation in the current settlements.  If you have not previously submitted a Proof of Claim form in the Refco Securities Litigation, you must submit one postmarked no later than March 15, 2011.  Click here to download the Proof of Claim to participate in the settlements with defendant Grant Thornton LLP and defendants Joseph J. Murphy, Dennis A. Klejna and William M. Sexton. 

October 27, 2010 - Judge Rakoff Approves Settlements with Audit Committee Defendants and THL Defendants and with Underwriter Defendants and approves Plan of Allocation

On October 27, 2010, following a Settlement Hearing, the Honorable Jed S. Rakoff granted final approval to the settlements reached with the Audit Committee Defendants and the THL Defendants and the Underwriter Defendants (including Sandler O'Neil & Partners, L.P.). Judge Rakoff certified the settlement class as to these defendants and approved the proposed Plan of Allocation for the settlement proceeds.  Judge Rakoff also approved Lead Counsel's motion for attorneys' fees and expenses.  Click here to view the related Court Orders and Judgments on the Case Documents page.

July 30, 2010 – Judge Rakoff Grants Preliminary Approval to Settlements with Audit Committee Defendants and THL Defendants and with Underwriter Defendants and Sets Settlement Hearing

On July 30, 2010, the Honorable Jed S. Rakoff granted preliminary approval to a settlement reached between Lead Plaintiffs and the Audit Committee Defendants and the THL Defendants, which provides for a payment of $130 million for the benefit of the settlement class, plus a possible additional settlement payment of up to $10 million; and to a settlement reached between Lead Plaintiffs and the Settling Underwriter Defendants, which provides for payment of $49.5 million for the benefit of the settlement class.  Judge Rakoff also preliminarily certified a settlement class for these settlements and approved the distribution of notice to class members concerning these settlements and a settlement between Lead Plaintiffs and Sandler O’Neill & Partners L.P., which provides for a payment of $3.5 million, that had previously been preliminarily approved.  The action is continuing against the remaining defendants.

Judge Rakoff scheduled a hearing (the “Settlement Hearing”) for October 27, 2010 at 4:00 p.m.at the United States Courthouse, 500 Pearl Street, New York, NY 10007.  The purpose of the Settlement Hearing will be to determine, among other things, whether the proposed settlements are fair, reasonable and adequate and should be approved by the Court; whether the proposed plan of allocation for the settlement proceeds is fair and reasonable and should be approved; and whether the plaintiffs’ attorneys’ application for an award of attorneys’ fees and reimbursement of litigation expenses should be granted.

If you purchased or otherwise acquired Refco Group Ltd., LLC/Refco Finance Inc. 9% Senior Subordinated Notes due 2012 (CUSIP Nos. 75866HAA5 and/or 75866HAC1) and/or common stock of Refco (CUSIP No. 75866G109) during the period July 1, 2004 through and including October 17, 2005, you may be eligible to participate in the settlements and your rights may be affected. 

 

 

PLEASE NOTE THE FOLLOWING KEY DATES WITH RESPECT TO THESE SETTLEMENTS:

 

Deadline for Filing a Proof of Claim: November 9, 2010
Deadline for Requesting Exclusion: October 7, 2010
Deadline for Objections: October 7, 2010
Settlement Hearing: October 27, 2010

 

For additional important information about these settlements and copies of the notices, Plan of Allocation, and Proof of Claim form, please visit the Refco Securities Litigation website at www.refcosecuritieslitigation.com.

You may also obtain a copy of the Notice Packet, which contains the two notices, the Plan of Allocation and the Proof of Claim form, by clicking here.  Please note, only one copy of the Proof of Claim form, which applies to all the settlements, should be submitted.

 

BACKGROUND 

On February 3, 2006, the Honorable Gerard Lynch appointed BLB&G client RH Capital as Co-Lead Plaintiff and BLB&G as Co-Lead Counsel for the Class in this securities fraud class action.  Judge Lynch cited the value of BLB&G's experience in prosecuting large and complex securities class actions, and the fact that BLB&G has "a particularly distinguished record in this kind of litigation" and has litigated many of the "largest recoveries since the enactment of the PSLRA," as significant factors in favor of appointing BLB&G as Co-Lead Counsel.

For more detailed information regarding developments in the case, please click here.

 

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