Regulatory concerns may force the sale of Refco's brokerage unit to take place as a shift in customer accounts rather than an out-and-out sale, Reuters reports. An acquisition handled this way would leave the company open to regulatory action and penalties, a source familiar with the sale told The Wall Street Journal.

However, bidders are not expected to back away from the deal since the transfer is said to achieve the same effect as an outright sale would. But some companies, including Merrill Lynch and Warburg Pincus LLC, have already dropped out of the bidding.

Refco said in a statement it was not organizing the sale as an auction to protect any one individual. The sale is part of Refco's bankruptcy proceedings, with a federal judge overseeing the auction. The deadline for the bids was 4 p.m. Friday. The company, its creditors and advisors, were scheduled to evaluate the offers over the weekend and conduct the auction next week. Refco is aiming to announce the buyer in court Thursday.

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