July 11, 2007 – Refco Examiner Files Final Report with Bankruptcy Court
On July 11, 2007, the independent examiner reviewing
Refco’s 2005 bankruptcy filed his final report with the U.S. bankruptcy court in Manhattan.
Click
here to view the entire
Report.
June 29, 2007 – Judge
Lynch Grants Final Approval to BAWAG Settlement
On June 29, 2007, the
Honorable Gerard E. Lynch granted final approval to the
partial settlement reached between Lead Plaintiffs and
defendant BAWAG for a total of $140 million (the “BAWAG
Settlement”). In doing so, Judge Lynch found the
settlement to be fair, reasonable and adequate to the
Class. As part of the final approval opinion, Judge
Lynch also certified as a Class for settlement purposes
“…all persons and entities that purchased or otherwise
acquired Refco Group Ltd., LLC/Refco Finance Inc. 9%
Senior Subordinated Notes due 2012 and/or common stock
of Refco, Inc. during the period August 5, 2004 through
and including October 17, 2005 and who were damaged
thereby (subject to certain exceptions).” Click
here to view
Judge Lynch's Opinion.
May 31, 2007 - Judge Lynch Rejects Request
by Audit Committee Defendants and Defendant Silverman to Reconsider his April 30, 2007 Opinion
Sustaining Lead Plaintiffs' Fraud Claims Against Them.
On May 31, 2007, the Honorable Gerard E. Lynch denied motions brought
by the Audit Committee Defendants and Defendant Silverman for Judge Lynch to reconsider his April 30, 2007
Opinion rejecting these defendants' motions to dismiss. Click
here to view Judge Lynch's
Opinion.
Click here to view all
Court Orders.
April 30, 2007 - Judge Lynch Clears Way for Refco Class Action to Proceed;
Denies Bulk of Defendants' Efforts to Dismiss Securities Claims
On April 30, 2007, the Honorable Gerard E. Lynch issued an 87-page opinion in which
the Court denied the vast majority of the ten motions to dismiss filed by a total of twenty-eight defendants.
Click here
to view Judge Lynch’s Opinion.
Among other things, Judge Lynch sustained Plaintiffs’ claims of
securities fraud against Refco’s former auditor, Grant Thornton LLP, and the members of Refco’s Audit Committee.
With the exception of one individual who was dismissed from the case (former Refco Group CFO Robert Trosten),
the Refco Class Action will now proceed against all defendants named in Plaintiffs'
First Amended Consolidated
Class Action Complaint, including the Individual Defendants, the THL Defendants, the Underwriter Defendants and
defendant Grant Thornton LLP. Click here to see the identities of the
defendants.
March 5, 2007 – Judge Lynch Grants Preliminary Approval to BAWAG Settlement
On March 5, 2007, the Honorable Gerard E. Lynch preliminarily certified as a Class
“…all persons and entities that purchased or otherwise acquired Refco Group Ltd., LLC/Refco Finance Inc. 9% Senior
Subordinated Notes due 2012 (CUSIP Nos. 75866HAAS and/or 75866HAC1) and/or common stock of Refco, Inc.
(CUSIP No. 7566G109) during the period August 5, 2004 through and including October 17, 2005 and who were damaged
thereby (subject to certain exceptions).” Judge Lynch also granted preliminary approval to the partial settlement
reached between Lead Plaintiffs and defendant BAWAG and scheduled a hearing (the “Settlement Hearing”) to take place
on June 29, 2007 at the United States Courthouse, 500 Pearl Street, New York, NY, 1007. The purpose of the Settlement
Hearing will be to determine, among other things, whether the proposed settlement with BAWAG is fair, reasonable and
adequate to the Class and whether it should be approved by the Court.
Click here to view Judge Lynch’s Opinion.
Click here to view all Court Orders.
February 22, 2007 - Lead Plaintiffs Submit Revised
BAWAG Settlement to Court for Preliminary Approval
On February 22, 2007, Lead Plaintiffs submitted a revised BAWAG settlement to Judge Lynch for preliminary
approval and certification of the settlement class. The settlement has been revised to include language
agreed between the parties regarding certain effects the settlement may have on the remainder of the
litigation. Although certain terms of the settlement agreement have been revised, the amounts involved
in the settlement remain the same. If the settlement is preliminarily approved, notice explaining the
deal in greater detail will thereafter be sent to Class members, who will have an opportunity to file
any formal objections they may have before a final approval hearing is held by Judge Lynch sometime in
the Fall. The timing of the distribution of the funds recovered in this settlement to Class members
has not yet been determined. Click
here to view the
associated filings on our
Lead Plaintiff Filings page.
December 22, 2006 - Recent
Developments Pertaining to Bankruptcy Proceedings
Refco’s Chapter 11 Plan Approved by Bankruptcy Court. The Plan offers equity
holders an option to trade their Future Securities Class Action Recoveries for a
Small Percentage of Bankruptcy Litigation Recoveries. The Securities Co-Lead
Plaintiff who faces this choice will decline the Plan’s offer.
The following statement summarizes Lead Plaintiffs’ perspective on the Refco
bankruptcy proceedings and their significance for members of the prospective
securities class. The class is defined as current or former holders of Refco’s
publicly traded securities who purchased or acquired those securities between
August 5, 2004 and October 17, 2005 (the “Class Period”).
On October 17, 2005, Refco, Inc. (together with certain of its direct and
indirect subsidiaries and affiliates, collectively referred to here as “Refco”
or the “Debtors”) filed for bankruptcy protection in the United States
Bankruptcy Court for the Southern District of New York. Pursuant to bankruptcy
law, Refco’s filing meant that the securities class action pending in the
district court entitled In re Refco Inc. Securities Litigation, Case No. 05 civ
8626 (the “Securities Class Action”) could not include Refco as a defendant.
Rather, any securities claims against Refco (as opposed to all other defendants
sued in the securities class action) had to be lodged as a claim against the
estate in the bankruptcy proceedings. Lead Plaintiffs RH Capital Associates LLC
and Pacific Investment Management Company LLC filed such claims on behalf of all
Class Members on July 17, 2006.
On or about October 20, 2006, the Debtors filed a Joint Chapter 11 Plan.
Subsequently, the Debtors filed a Modified Joint Chapter 11 Plan (the “Plan”) on
December 4, 2006. Such plans are typically submitted to seek court approval of
how a bankrupt entity plans to distribute its assets among various claimants
(such as creditors and stockholders).
On December 15, 2006, United States Bankruptcy Judge Robert D. Drain approved
the Plan. Under the Plan, Refco will distribute approximately $4.1 billion – 24%
of the $16.8 billion creditors were owed when it filed for bankruptcy – plus the
Bankruptcy Litigation Recoveries from the lawsuits brought on behalf of Refco
against third parties.
Class Members are treated differently under the Plan depending on the type of
Refco securities that they purchased and whether they still hold the securities,
as described below.
1) Current Bondholders - Current holders of Refco’s 9% bonds maturing in 2012
who hold an Allowed Claim (i.e., allowed pursuant to other applicable
requirements under the Plan) will receive 83.42 cents on the dollar under the
Plan. Current bondholders are not required to decide between receiving amounts
recovered in connection with the Plan (as described below) or recovery of monies
through the Securities Class Action. The Plan specifically provides that current
bondholders who purchased during the Class Period may receive the benefit of
both the BAWAG settlement in the bankruptcy proceeding and any proposed BAWAG
settlement in the Securities Class Action.
2) Former Bondholders - Those who purchased bonds during the Class Period but
who no longer hold them are not entitled to any recovery on bond purchases under
the Plan. These claims are being pursued on their behalf against other
defendants in the Securities Class Action.
3) Current and Former Stockholders - Current Refco stockholders and Class
Members who are former holders of Refco stock and who hold an Allowed Interest
(i.e., allowed pursuant to other applicable requirements under Plan) may elect
to share in the amounts recovered by certain litigation trusts established under
the Plan (the “Plan Trusts”). Specifically, these current and former Refco
stockholders will be entitled to share in 3% of the first $500 million recovered
by the Plan Trusts (i.e., up to $15 million), 7.5% of the next $500 million
(i.e., up to $37.5 million), and 15% of any amounts recovered by the Plan Trusts
in excess of $1 billion. If, for example, $1 billion is recovered by the Plan
Trusts, current Refco stockholders and Class Members who are former holders of
Refco stock and who elect to receive a portion of such recoveries will share
$52.5 million based on the number of shares currently or previously held. As of
today’s date, no funds have been placed in the Plan Trusts and there is no
guarantee that there will ever be any money in these trusts to fund litigation.
In order to participate in any distribution from the Plan Trusts, Refco
stockholders who are Class Members must contribute to the Plan Trusts any
recovery that they may receive on their equity claims from the Securities Class
Action (other than from any BAWAG settlement, as explained further below).
Additionally, these Class Members must make this assignment by January 30, 2007
at 5:00 pm (ET). Note that the recent settlement with BAWAG in the Securities
Class Action is not affected by this provision. In other words, a Class Member
who selects this option will not have to tender his or her share of the BAWAG
recovery.
If you are a Class Member based upon the purchase of Refco stock and you have
already filed a claim in the bankruptcy proceeding and you make this election,
you will not receive any direct recovery of your losses on your equity-based
claims from the Securities Class Action. Instead, you will contribute that
entire recovery to the Plan Trusts and share only in a small percentage (from 3%
to 15%) of the aggregate amount recovered by the Plan Trusts with all other
current stockholders and Class Members who have claims based upon stock
purchases, as well as certain other creditors, who also made the election.
For example, if Class Members were to recover $50 million collectively in the
Securities Class Action as compensation for their losses on Refco stock, and the
election was made on behalf of the Class under the Plan, the $50 million would
go directly to the Plan Trusts and those Class Members would share in only a
small percentage (as low as 3%) of that recovery along with holders of stock who
are not Class Members. The Plan Trusts would have to recover approximately $1
billion in the aggregate to potentially achieve the same economic result for
these Class Members as a direct $50 million recovery in the Securities Class
Action absent the election. Therefore, it is the judgment of Lead Plaintiff RH
Capital Associates LLC and Lead Counsel that the election offered under the Plan
is not in the best economic interest of Class Members who purchased Refco stock.
If you are a former Refco shareholder and did not file a bankruptcy claim by
the July 17, 2006 deadline, this option is not available to you.
Lead Plaintiff RH Capital Associates LLC, in representing itself, will not
relinquish its right to amounts that may be recovered in the Securities Class
Action in exchange for receipt of some allotment of 3 to 15% of the amounts
recovered by the Plan Trusts. Nor will Lead Plaintiff RH Capital Associates LLC
pursue such an option on behalf of the prospective class in the bankruptcy
proceeding or the Securities Class Action. Lead Plaintiff Pacific Investment
Management Company LLC held only Refco bonds and is therefore not required to
make this election.
September 8, 2006 - Lead Plaintiffs Present
the BAWAG Settlement to Court for Preliminary Approval
On September 8, 2006, Lead Plaintiffs presented the BAWAG settlement
to Judge Lynch for preliminary approval and certification of the settlement class. If the settlement
is preliminarily approved, notice explaining the deal in greater detail will thereafter be sent to
Class members, who will have an opportunity to file any formal objections they may have before a
final approval hearing is held by Judge Lynch sometime in the Fall. The timing of the distribution
of the funds recovered in this settlement to Class members has not yet been determined. Click
here to view the
associated filings on our
Lead Plaintiff Filings page.
June 5, 2006 - Lead Plaintiffs Announce Settlement With Austrian
Bank BAWAG for Payment of at Least $108 Million in Cash and Cooperation Against
Others Who Played Role in Refco Affair
On June 5, 2006, RH Capital Associates
LLC and Pacific Investment Management Company LLC, the institutional investors
appointed by U.S. District Judge Gerard E. Lynch to serve as Lead Plaintiffs on
behalf of investors victimized by the Refco affair, signed a settlement
agreement with BAWAG P.S.K. Bank für Arbeit und Wirtschaft und Österreichische
Postsparkasse Aktiengesellschaft, an Austrian bank that had been sued for
securities fraud by Lead Plaintiffs. Pursuant to the agreement, BAWAG has agreed
to pay to Lead Plaintiffs, on behalf of the Class, at least $108 million in
cash, with the possibility of an additional payment of up to $32 million when
BAWAG is sold in the coming months.
In addition to the cash payment(s),
BAWAG has pledged to cooperate with Lead Plaintiffs as they pursue the Class’
claims against other current (and prospective) defendants in the consolidated
securities class action. Indeed, BAWAG began to assist Lead Plaintiffs before the
settlement agreement was formally signed, making available for Lead Counsel’s
review a large cache of documents referring to the various roles played by Refco
insiders and Refco’s bankers, lawyers, and auditors.
The settlement resolves two
categories of claims asserted against BAWAG in the Refco class action, namely,
claims arising from Refco’s bond and stock offerings in 2004 and 2005, and
claims arising out of the purchase of Refco securities in the open market
between August 5, 2004 and October 17, 2005 . As part of the settlement, the
Class’ claims against BAWAG will be released.
The settlement between Lead
Plaintiffs and BAWAG is an integral part of a set of settlements recently
reached between BAWAG and various parties, including Lead Plaintiffs, the United
States Attorney for the Southern District of New York (“USAO”) and the Official
Committee of Unsecured Creditors in the Refco bankruptcy proceedings. In order
to facilitate BAWAG’s ability to achieve global resolution of its potential
liability relative to Refco, Lead Plaintiffs have agreed that certain funds they
may obtain from a restitution fund that the USAO is establishing for victims of
the Refco debacle (and funded by BAWAG) will be credited as partial payment of
BAWAG’s obligations under this agreement. The agreement specifically provides,
however, that BAWAG remains absolutely obligated to make the payments to the
Class required under the deal if, for any reason, the funds obtained through the
restitution fund fall short of the required amounts.
This is the first settlement achieved for the Class in the Refco Securities
Litigation. Lead Plaintiffs will continue to pursue the Class’ claims against
the remaining defendants, which include several former Refco insiders (including
former CEO Phillip Bennett), Refco’s former board of directors, Refco’s former
auditor (Grant Thornton LLP), the investment banking concern that helped take
Refco “public” in August 2005 (Thomas H. Lee Partners L.P. and related
entities), and several investment banks that sold Refco stocks and bonds to
public investors (including Goldman Sachs, Credit Suisse and Bank of America).
Lead Plaintiffs are also evaluating the role and potential liability of other
participants in the Refco scandal.
The attorneys who worked to
achieve this settlement are partners Sean Coffey, Salvatore Graziano and
John Browne and associate Jeremy Robinson of Bernstein Litowitz Berger &
Grossmann LLP, and partners Stuart Grant, James Sabella, and Megan McIntyre and
associates Christine Mackintosh and Jill Agro of Grant & Eisenhofer P.A. Their
work prosecuting the Class’ claims against other defendants in the Refco debacle
continues.
ATTORNEY ADVERTISING/DISCLAIMER
For Grant & Eisenhofer P.A.:
Stuart Grant
James Sabella
Megan McIntyre
Jonathan Margolis
Christine Mackintosh
|
For Bernstein Litowitz Berger & Grossmann LLP:
Sean Coffey
Salvatore Graziano
John Browne
Jeremy Robinson
David Webber
|
Information regarding the bar admissions of the attorneys at
Grant & Eisenhofer P.A. and
Bernstein Litowitz Berger & Grossmann LLP
may be viewed via the links to the respective firms' websites.
Grant & Eisenhofer P.A.:
485 Lexington Avenue - 29th Floor
New York, NY 10017
Tel: 646.722.8500
Fax: 646.722.8501
www.gelaw.com
|
Bernstein Litowitz Berger & Grossmann LLP:
1285 Avenue of the Americas
New York, NY 10019
Tel: 212.554.1400
|
