Refco: Enron All Over Again?


I’m having flashbacks to Enron. Enron, Enron, Enron. Well, it looks like Refco could have been 2005’s Enron, but on a smaller scale. Not too small, though. Refco raised $583 million in its public offering in August. In October, the company filed for bankruptcy protection.

Refco was the largest independent U.S. commodities broker. But it appears that the balance sheet was pumped up via hidden debt of $430 million. Prior to the IPO the balance sheet showed $50 billion of assets and $150 million of equity. Too bad the hidden debt wipes out all that equity and leaves the company with a negative net worth.

Does this say anything about Sarbanes-Oxley?

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