Just as the spotlight was taken off of the debacled Refco, it now appears there is talk about whether the brokerage firm's largest remaining unit should be shut down, according The Wall Street Journal.
A group of creditors currently has about $1.7 billion in claims against the firm's Bermuda-based trading unit, Refco Capital Markets. The attorneys representing the creditors are geared toward convincing a federal bankruptcy judge that their clients' money should be returned immediately
Attorney Paul Maloney said the creditors claim that the firm used money from the unit to improperly fund the acquisitions of other Refco units.
"What you have here is a minority of Refco Capital Market clients trying to step ahead of the majority," said Anthony W. Clark, an attorney for Refco.
The claim is that foreign banks and wealthy individuals did business with the Bermuda unit to move the money to a less regulated offshore account. Clark commented that the customers did this to make high-risk bets and that they claim not to know that there was possibility for failure.
