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Case Status:    SETTLED
On or around 03/22/2011 (Date of order of final judgment)

Filing Date: October 11, 2005

Several purported shareholder class action lawsuits have been filed against Refco and certain of its officers and directors with violations of the Securities Act and the Exchange Act. Refco provides execution and clearing services for exchange traded derivatives; and brokerage services in the fixed income and foreign exchange markets in the United States, Bermuda, and the United Kingdom.

Refco went public via an initial public offering in August 2005. A mere three months later, on October 10, 2005, Refco announced that its Chief Executive Officer ("CEO") and Chairman and controlling shareholder, was being placed on a leave of absence and that the Company had discovered, purportedly through an internal review, a receivable of $430 million owed by the CEO to the Company. The Company also announced that based on the undisclosed related party transaction, its prior financial statements should not be relied upon.

According to the complaint, on or about August 10, 2005, Refco filed with the SEC a Form S-1/A Registration Statement (the "Registration Statement"), for the IPO. On or about August 11, 2005, the Prospectus (the "Prospectus") with respect to the IPO, which forms part of the Registration Statement, became effective and 26.5 million of Refco's common stock were sold to the public, thereby raising approximately $583 million. According to the complaint, the Prospectus issued in connection with the IPO was materially false and misleading for several reasons. As detailed in the complaint, Refco has now admitted that those financial statements should no longer be relied upon and will likely be restated. This amounts to an admission that those financial statements were materially false and misleading when issued. In a section entitled "Certain Relationships And Related Transactions", the Prospectus purported to detail all of the related party transactions concerning its business. The Prospectus, however, failed to disclose the related-party loan of $430 million to an entity controlled by the CEO.

As a result of this news, the price of Refco common stock declined precipitously falling from $28.56 per share to $15.60 per share on extremely heavy trading volume.

NOTE: Refco Inc. is a non-party that is not named in this lawsuit due to its filing for bankruptcy protection under Chapter 11 of the Bankruptcy Code on October 17, 2005.

On February 3, 2006, the Honorable Gerard Lynch appointed RH Capital Associates LLC ("RH Capital") and Pacific Investment Management Company LLC ("PIMCO") as Co-Lead Plaintiffs and Bernstein Litowitz Berger & Grossmann LLP and Grant & Eisenhofer, P.A. as Co-Lead Counsel for the Class in this securities fraud class action.

On April 3, 2006, the Lead Plaintiffs filed a Consolidated Class Action Complaint which named a number of additional defendants, including certain officers, directors and underwriters, and additional claims.

On May 5, 2006, the Lead Plaintiffs filed a First Amended Consolidated Class Action Complaint, adding Defendant BAWAG P.S.K. Bank für Arbeit und Wirtschaft und Österreichische Postsparkasse Aktiengesellschaft.

On June 5, 2006, a Suggestion of Bankruptcy was filed as to Refco Managed Futures LLC, Westminster-Refco Management LLC, and Lind-Waldock Securities LLC.

In July 2006, the defendants filed several motions to dismiss the First Amended Consolidated Class Action Complaint.

On September 8, 2006, a motion for preliminary approval of a partial settlement with Defendant BAWAG was filed. On September 8, 2006, a Stipulation and Agreement of Settlement was filed outlining the partial settlement in the amount of $108,000,000 (“Non-Contingent Payment”), plus additional payment up to $32,000,000 (“Contingent Payment”). On January 9, 2007, the motion for preliminary approval was denied. On February 22, 2007, a notice of settlement was filed and on March 5, 2007, the Court preliminarily approved the settlement with BAWAG.

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. On May 31, 2007, Judge Lynch denied motions for reconsideration of that opinion.

On June 29, 2007, Judge Lynch approved the class action settlement with BAWAG.

On December 3, 2007, the Lead Plaintiffs filed a Second Amended Consolidated Class Action Complaint adding Mayer Brown LLP and Mayer Brown partner as named Defendants.

On December 7, 2007, a motion for preliminary approval of a partial settlement with Defendant Dennis Klejna was filed. According to the motion, the settlement includes the payment of $7,600,000 in cash. Defendant Klejna further agreed to provide access to document and financial information.

On December 20, 2007 and February 1, 2008, certain defendants filed motions to dismiss the Second Amended Consolidated Class Action Complaint.

On January 22, 2008, Judge Lynch preliminarily approved the settlement with Defendant Klejna.

On February 21, 2008, a motion for preliminary approval of a partial settlement with Defendant Joseph J. Murphy was filed. According to the motion, the settlement includes the payment of $7,900,000 in cash. The motion was granted on March 26, 2008.

On August 14, 2008, the motion of Credit Suisse Securities (USA) LLC, Banc of America Securities LLC and Deutsche Bank Securities, Inc. to Dismiss Count Three of the Second Amended Consolidated Class Action Complaint against them was granted.

On October 27, 2008, a motion for preliminary approval of partial settlement with Defendant Sandler O’Neill Partners LP was filed. The settlement includes the payment of $3,500,000 in cash for the Settlement Class. The motion was granted on November 6, 2008.

On December 2, 2008, an Order was entered regarding the Lead Underwriter Defendants' motion to reconsider the Court's Order of November 6, 2008, granting preliminary approval of a partial settlement between Lead Plaintiffs and defendant Sandler O'Neill. According to the Order, the motion is granted, but upon reconsideration, the Court reaffirms and adheres to that Order.

On March 17, 2009, Judge Lynch signed the Opinion and Order. According to the Order, the Second Amended Consolidated Class Action Complaint is dismissed in its entirety as to the Mayer Brown Defendants. On March 18, 2009, the Court entered the Clerk’s Judgment. On April 1, 2009, the lead plaintiffs filed a motion for partial summary judgment. On April 16, 2009, the lead plaintiffs filed a notice of appeal from the March 18th judgment.

On March 26, 2010, Judge Rakoff signed the Stipulation and Order Of Partial Discontinuance. According to the Order, Counts Six, Eight, Nine, Twelve, Thirteen and Fourteen of the Complaint be, and hereby are, dismissed as against defendants Murphy and Sexton; Counts Six, Eight, Nine, Thirteen and Fourteen of the Complaint be, and hereby are, dismissed as against defendant Klejna; Counts Four, Nine, Thirteen and Fourteen of the Complaint be, and hereby are, dismissed as against defendant Sherer; and for the avoidance of doubt: Counts Three and Four of the complaint remain pending against defendants Murphy, Sexton and Klejna, and Counts Five, Six and Eight of the Complaint remain pending against defendant Sherer. Each party shall bear his or its own costs in connection with the claims dismissed herein and no party will assert that the claims were brought, prosecuted or defended in bad faith or violation of Fed. R. Civ.P.11.

On April 5, 2010, a motion to preliminarily approve the settlement with the Audit Committee Defendants and The THL Defendants was filed. According to settlement documents, the settlement is for at least $130 million in cash, plus an amount equal to 50% of any additional amount that the THL Entities receive as restitution from the government in connection with their claims against Refco, up to a maximum additional amount of $10 million.

On April 9, 2010, a motion to certify the class was filed. On April 20, 2010, the plaintiffs filed a motion for preliminary approval of settlement with the remaining Underwriter Defendants. According to settlement documents, the settlement is in the amount of $49.5 million in cash.

On April 23, 2010, defendant Grant Thornton LLP filed a motion for summary judgment.

According to a Report and Recommendation filed on May 11, 2010, the Special Master recommends that: 1. The Settlements with the THL Defendants and the Audit Committee Defendants and the Underwriter Defendants should each be preliminarily approved. 2. Settlement classes be approved for the purpose of effectuating the Settlement. 3. The proposed form and manner of notice be approved as set forth in this order.

On August 2, 2010, the Court entered the Mandate from the U.S. Court of Appeals affirming the dismissal of the Mayer Brown Defendants in the March 18, 2009 Judgment. On August 3, 2010, the settlements with THL Defendants, Audit Committe Defendants, and the Underwriter Defendants were preliminarily approved. The Settlement Hearing is scheduled for October 27, 2010.

According to the motion filed on October 18, 2010, a proposed settlement is pending between the Court-appointed Lead Plaintiffs RH Capital Associates LLC and Pacific Investment Management Company LLC (“Lead Plaintiffs”) and (i) defendant Grant Thornton LLP (“Grant Thornton”) and (ii) defendants Joseph J. Murphy, Dennis A. Klejna and William M. Sexton (the “Settling Officer Defendants” and together with Grant Thornton the “Settling Defendants”). The settlement with Grant Thornton provides for the payment of $25,000,000 in cash for the benefit of the Settlement Class (as defined below). The settlement with the Officer Defendants provides for the payment of $300,000 in cash for the benefit of the Settlement Class.

On October 19 and 20, 2010, Judge Jed S. Rakoff signed several stipulation of voluntary dismissals, dismissing the action against certain individual defendants, Refco Group Holdings, Inc., and The Phillip R. Bennett Three Year Annuity Trust.

On October 29, 2010, the Court entered the Final Judgment and Order approving the settlements with defendant Sandler O'Neill & Partners, L.P., the Underwriter Defendants, and the Audit Committee Defendants.

On November 15, 2010, the Court entered the amended preliminary approval order concerning the pending settlement between the plaintiffs and Grant Thornton LLP and three individual defendants. The settlement hearing was held on March 11, 2011. On March 22, 2011, the Court approved the settlements with Defendant Grant Thornton LLP and the Individual Defendants. The Court approved the plan of allocation and awarded attorneys' fees in the amount of $4,532,273.27 and $120,704.06 in reimbursement of litigation expenses.

COMPANY INFORMATION:

Sector: Financial
Industry: Investment Services
Headquarters: United States

SECURITIES INFORMATION:

Ticker Symbol: RFX
Company Market: New York SE
Market Status: Public (Listed)

About the Company & Securities Data


"Company" information provides the industry and sector classification and headquarters state for the primary company-defendant in the litigation. In general, "Securities" information provides the ticker symbol, market, and market status for the underlying securities at issue in the litigation.

In most cases, the primary company-defendant actually issued the securities that are the subject of the litigation, and the securities information and company information relate to the same entity. In a small subset of cases, however, the primary company-defendant is not the issuer (for example, cases against third party brokers/dealers), and the securities information and company information do not relate to the same entity.
COURT: S.D. New York
DOCKET #: 05-CV-8626
JUDGE: Hon. Gerard E. Lynch
DATE FILED: 10/11/2005
CLASS PERIOD START: 08/11/2005
CLASS PERIOD END: 10/07/2005
PLAINTIFF FIRMS NAMED IN COMPLAINT:
  1. Lerach Coughlin Stoia Geller Rudman & Robbins LLP (Melville)
    200 Broadhollow, Suite 406, Lerach Coughlin Stoia Geller Rudman & Robbins LLP (Melville), NY 11747
    631.367.7100 631.367.1173 · info@lerachlaw.com
No Document Title Filing Date
COURT: S.D. New York
DOCKET #: 05-CV-8626
JUDGE: Hon. Gerard E. Lynch
DATE FILED: 12/03/2007
CLASS PERIOD START: 07/01/2004
CLASS PERIOD END: 10/17/2005
PLAINTIFF FIRMS NAMED IN COMPLAINT:
  1. Bernstein Litowitz Berger & Grossmann LLP (Former New York)
    1285 Avenue of the Americas, 33rd Floor, Bernstein Litowitz Berger & Grossmann LLP (Former New York), NY 10019
    212.554.1400 212.554.1444 · blbg@blbglaw.com
  2. Grant & Eisenhofer (New York)
    485 Lexington Avenue, 29th Floor, Grant & Eisenhofer (New York), NY
    646.722.8500 646.722.8500 · lawyers@gelaw.com
  3. Grant & Eisenhofer (Wilmington)
    1201 N. Market Street, Suite 2100, Grant & Eisenhofer (Wilmington), DE 19801
    302.622.7000 302.622.7100 · lawyers@gelaw.com
No Document Title Filing Date
No Document Title Filing Date
No Document Title Filing Date