Man buys Refco for $282m; Bennett indicted

A federal judge approved Man Group's purchase of the broking business of the bankrupt Refco financial services group yesterday for $282 million in cash, plus debts. Meanwhile, Refco's former chief executive Phillip Bennett was indicted for eight counts of conspiracy and securities fraud.

Man won the auction with a bid worth a total of $323 million - $282 million cash and $41 million of assumed debts and other considerations. Bankruptcy judge Robert Drain resisted calls to speed up the auction after an initial bid from a team led by private equity firm JC Flowers was withdrawn last month.

The sale is well below initial estimates. initially, Refco planned to sell the brokerage, Refco LLC, and various other subsidiaries for a total of $768 million. But since the Chapter 11 announcement of the parent company (though not the brokerage) clients have been leaving the brokerage in large numbers, reducing its value.

Man now plans to liquidate the brokerage under Chapter 7 of US bankruptcy law, bringing its customer accounts into its own brokerage business.

Meanwhile, a grand jury in New York indicted Refco's former chief executive, Phillip Bennett, for conspiring to conceal debts run up by its customers in the late 1990s, and thus defrauding the investors in Refco's August initial public offering (IPO). Bennett himself made $100 million from selling shares in the IPO, according to the indictment. Although the indictment referred to other conspirators, none were named, and no others have so far been indicted.