Refco discussion

discussion on brokers, order execution, order automation and everything broker-related

Moderator: moderators

User avatar
michal.kreslik
rank: 1000+ posts
rank: 1000+ posts
Posts: 1032
Joined: Sat May 13, 2006 2:40 am
Reputation: 0
Location: Monte Carlo, Monaco
Real name: Michal Kreslik
Gender: Male
Contact:

Postby michal.kreslik » Fri Jul 14, 2006 11:58 am

fatdog, concerning your refco account:

fatdog1 wrote:I don't trade in that account.
I won't make any money for a secured creditor to get.
I consider it lost until I hear different.


the time of your money becoming your money again may be near:

GAIN Capital Group to Purchase Refco FX Customer Accounts

In case the client notice disappears from the target web, I'm quoting it here:

Important Client Notice
GAIN Capital Group to Purchase Refco FX Customer Accounts

Agreement Provides Recovery Upside to Continuing Customers;
Final Deal is Subject to Bankruptcy Court Approval

June 30, 2006

In a motion filed with the Bankruptcy Court today, Refco Inc. (OTC: RFXCQ) said it has proposed to enter an agreement with privately held GAIN Capital Group (GAIN), under which GAIN would acquire the Refco FXA (RFXA) retail customer account information and related assets. The proposed agreement provides RFXA customers with the potential to recover up to 100 percent of account balances. The proposed agreement is reflected in a non-binding term sheet that is subject to documentation and Bankruptcy Court approval, among other conditions.

RFXA currently has approximately 15,000 retail foreign exchange (forex) trading accounts. Upon the closing date of the proposed transaction, approximately 40 percent of RFXA's customers could receive a full recovery of their account balances, if they open an account with GAIN and execute at least one trade. Customers with larger deposits can also receive up to 100 percent recovery provided they meet certain trading thresholds, as outlined in the term sheet.

"We chose to work with GAIN for a number of reasons. GAIN is a leader in the industry and expressed early interest in the RFXA clients. They also have both the financial and operational resources necessary to help achieve a smooth transition for customers and to offer continued support for their ongoing trading needs. Just as important, GAIN and FOREX.com have an exemplary record with the National Futures Association (NFA) and, unlike RFXA, are regulated as a futures commission merchant. Their reputation in the industry speaks for itself," said Refco's Chief Restructuring Officer David Pauker.

"The proposed agreement benefits creditors by reducing a portion of the pre-petition customer claims against RFXA," continued Mr. Pauker. These claims, which include customer deposits, total over $100 million.

"At the same time, the proposed transaction with GAIN represents a much improved recovery for RFXA customers," Mr. Pauker said.



"We are pleased to be able to offer Refco FX clients the ability to recover up to 100 percent of their assets and at the same time to trade forex with a regulated firm," said GAIN's Chief Executive Officer Mark Galant. GAIN Capital Group and FOREX.com are registered with the National Futures Association (NFA) as a Futures Commission Merchant (NFA ID #0339826).

"In addition, if a RFXA customer chooses to opt into the program but does not recoup the full amount of their online account balance, they would still retain all their rights to the balance of their claim as a general unsecured creditor of Refco," Mr. Galant said.

Under the terms of the proposed agreement, GAIN will offer RFXA clients the option to open an account at FOREX.com, GAIN’s retail division. For RFXA clients who opt to do so, GAIN has agreed to immediately fund an amount equal to the lesser of the customer’s aggregate RFXA account balance or $150 per account when the client activates a new account. Clients with balances of $40 or less would be able to withdraw their funds immediately upon opening their account at FOREX.com. For customers with larger deposits, GAIN has agreed to reimburse customers up to their full account balance, payable in 25 percent increments every six months, provided they meet certain trading thresholds.

Mr. Pauker said that, at present, it is not expected that RFXA will have sufficient assets to pay its creditors in full. In addition to customer and trade liabilities, which exceed $140 million, RFXA is a guarantor of Refco's secured bank debt and unsecured bonds, which total in excess of $1 billion. RFXA has approximately $54 million of cash and securities, much of which is claimed as collateral by Refco’s secured lenders. RFXA is also owed money by some Refco affiliates, but the timing and amount of those recoveries is uncertain; Refco's lenders also assert claims to those receivables.

About GAIN Capital Group

GAIN Capital Group is a leading provider of foreign exchange services, including direct-access trading and asset management. Founded in 1999 by Wall Street veterans, GAIN Capital Group is one of the largest, most respected firms in the online forex industry, servicing clients from more than 140 countries and supporting trade volume in excess of $100 billion per month. Headquartered in Bedminster, New Jersey, the company operates sales offices in New York and Shanghai.

The company operates two full service web portals. FOREX.com (www.forex.com) services individual investors of all experience levels with a full-service trading platform, lower account minimums and extensive education and training. The company's flagship service, GAIN Capital (www.gaincapital.com) focuses on the needs of professional forex traders, including hedge funds and money managers.

GAIN Capital Group and FOREX.com are registered with the National Futures Association (NFA) as a Futures Commission Merchant (NFA ID #0339826).

For more information: www.forex.com

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of the 1995. In this press release, all statements other than statements of historical fact are forward looking statements that involve risks and uncertainties and actual results could differ. These forward-looking statements are based on assumptions that we have made in light of our experience and on our perceptions of historical events, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. Although we believe that these forward-looking statements have a reasonable basis, you should be aware that numerous factors, including the outcome of the Audit Committee's investigation; our ability to obtain financing arrangement or alternatives; changes in domestic and international market conditions; competition; our ability to attract and retain customers; our relationships with introducing brokers; retention of our management team; our ability to manage our growth or integrate future acquisitions, our exposure to significant credit risks with respect to our customers, international operations and exchange membership requirements, the effectiveness of compliance and risk management methods, potential litigation or investigations, employee or introducing broker misconduct or errors, reputational harm, and changes in capital requirements, could cause actual results to differ materially from our expectations. Because of these factors, we caution that you should no place undue reliance on any of our forward-looking statements. Further, any forward looking statement speaks only as of today. It is impossible for us to predict how new events or developments may affect us. The Company disclaims any intention or obligation to update or revise any forward-looking statements, either to reflect new information or developments or for any other reason.
--------------------------------------------------------------------------------

RISK WARNING: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. Before deciding to trade foreign exchange you should carefully consider your monetary objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your deposited funds and therefore you should not speculate with capital that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent advisor if you have any doubts. Past returns are not indicative of future results.

Refco F/X Associates LLC and its affiliates assume no responsibility for errors, inaccuracies or omissions in these materials. They do not warrant the accuracy or completeness of the information, text, graphics, links or other items contained within these materials. Refco F/X Associates LLC and its affiliates shall not be liable for any special, indirect, incidental, or consequential damages, including without limitation losses, lost revenues, or lost profits that may result from these materials. This email is not a solicitation to buy or sell currency. All information contained in this e-mail is strictly confidential and is only intended for use by the recipient. All e-mail sent to or from this address will be received by the Refco F/X Associates LLC corporate e-mail system and is subject to archival and review by someone other than the recipient. Refco F/X Associates LLC is compensated for its services through the spread between the bid/ask prices.

Please add www.kreslik.com to your ad blocker white list.
Thank you for your support.

Ali Son
rank: 150+ posts
rank: 150+ posts
Posts: 179
Joined: Sun May 28, 2006 1:30 am
Reputation: 0
Location: Boston, MA
Gender: None specified

Postby Ali Son » Fri Jul 14, 2006 12:21 pm

Nice find Michal,

Gain seems to be trying to gain (yeah I know... I couldn't resist), market share big time in Forex. I saw a GAIN VP or higher up gung ho on the near exponential growth of the market this past year and jumping through hoops to get a higher profile for Gain.

So, since reputation is key for Gain as Refeco characterizes, it is certainly also in their interest to "make the clients whole." If that doesn't do it, I guess they can smell the money!

Good thing you didn't meet that Refco guy down that dark alley, Fatdog1! :)


Now, I wonder what all this growth will mean for trading in forex and its future? Anybody care to divine the future?
-OS
Last edited by Ali Son on Fri Jul 14, 2006 12:28 pm, edited 3 times in total.

fatdog1
rank: 150+ posts
rank: 150+ posts
Posts: 164
Joined: Thu May 18, 2006 11:58 am
Reputation: 0
Gender: Male
Contact:

Postby fatdog1 » Fri Jul 14, 2006 12:26 pm

michal.kreslik wrote:fatdog, concerning your refco account:

fatdog1 wrote:I don't trade in that account.
I won't make any money for a secured creditor to get.
I consider it lost until I hear different.


the time of your money becoming your money again may be near:

GAIN Capital Group to Purchase Refco FX Customer Accounts

In case the client notice disappears from the target web, I'm quoting it here:

Important Client Notice
GAIN Capital Group to Purchase Refco FX Customer Accounts

Agreement Provides Recovery Upside to Continuing Customers;
Final Deal is Subject to Bankruptcy Court Approval

June 30, 2006

In a motion filed with the Bankruptcy Court today, Refco Inc. (OTC: RFXCQ) said it has proposed to enter an agreement with privately held GAIN Capital Group (GAIN), under which GAIN would acquire the Refco FXA (RFXA) retail customer account information and related assets. The proposed agreement provides RFXA customers with the potential to recover up to 100 percent of account balances. The proposed agreement is reflected in a non-binding term sheet that is subject to documentation and Bankruptcy Court approval, among other conditions.

RFXA currently has approximately 15,000 retail foreign exchange (forex) trading accounts. Upon the closing date of the proposed transaction, approximately 40 percent of RFXA's customers could receive a full recovery of their account balances, if they open an account with GAIN and execute at least one trade. Customers with larger deposits can also receive up to 100 percent recovery provided they meet certain trading thresholds, as outlined in the term sheet.

"We chose to work with GAIN for a number of reasons. GAIN is a leader in the industry and expressed early interest in the RFXA clients. They also have both the financial and operational resources necessary to help achieve a smooth transition for customers and to offer continued support for their ongoing trading needs. Just as important, GAIN and FOREX.com have an exemplary record with the National Futures Association (NFA) and, unlike RFXA, are regulated as a futures commission merchant. Their reputation in the industry speaks for itself," said Refco's Chief Restructuring Officer David Pauker.

"The proposed agreement benefits creditors by reducing a portion of the pre-petition customer claims against RFXA," continued Mr. Pauker. These claims, which include customer deposits, total over $100 million.

"At the same time, the proposed transaction with GAIN represents a much improved recovery for RFXA customers," Mr. Pauker said.



"We are pleased to be able to offer Refco FX clients the ability to recover up to 100 percent of their assets and at the same time to trade forex with a regulated firm," said GAIN's Chief Executive Officer Mark Galant. GAIN Capital Group and FOREX.com are registered with the National Futures Association (NFA) as a Futures Commission Merchant (NFA ID #0339826).

"In addition, if a RFXA customer chooses to opt into the program but does not recoup the full amount of their online account balance, they would still retain all their rights to the balance of their claim as a general unsecured creditor of Refco," Mr. Galant said.

Under the terms of the proposed agreement, GAIN will offer RFXA clients the option to open an account at FOREX.com, GAIN’s retail division. For RFXA clients who opt to do so, GAIN has agreed to immediately fund an amount equal to the lesser of the customer’s aggregate RFXA account balance or $150 per account when the client activates a new account. Clients with balances of $40 or less would be able to withdraw their funds immediately upon opening their account at FOREX.com. For customers with larger deposits, GAIN has agreed to reimburse customers up to their full account balance, payable in 25 percent increments every six months, provided they meet certain trading thresholds.

Mr. Pauker said that, at present, it is not expected that RFXA will have sufficient assets to pay its creditors in full. In addition to customer and trade liabilities, which exceed $140 million, RFXA is a guarantor of Refco's secured bank debt and unsecured bonds, which total in excess of $1 billion. RFXA has approximately $54 million of cash and securities, much of which is claimed as collateral by Refco’s secured lenders. RFXA is also owed money by some Refco affiliates, but the timing and amount of those recoveries is uncertain; Refco's lenders also assert claims to those receivables.

About GAIN Capital Group

GAIN Capital Group is a leading provider of foreign exchange services, including direct-access trading and asset management. Founded in 1999 by Wall Street veterans, GAIN Capital Group is one of the largest, most respected firms in the online forex industry, servicing clients from more than 140 countries and supporting trade volume in excess of $100 billion per month. Headquartered in Bedminster, New Jersey, the company operates sales offices in New York and Shanghai.

The company operates two full service web portals. FOREX.com (www.forex.com) services individual investors of all experience levels with a full-service trading platform, lower account minimums and extensive education and training. The company's flagship service, GAIN Capital (www.gaincapital.com) focuses on the needs of professional forex traders, including hedge funds and money managers.

GAIN Capital Group and FOREX.com are registered with the National Futures Association (NFA) as a Futures Commission Merchant (NFA ID #0339826).

For more information: www.forex.com

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of the 1995. In this press release, all statements other than statements of historical fact are forward looking statements that involve risks and uncertainties and actual results could differ. These forward-looking statements are based on assumptions that we have made in light of our experience and on our perceptions of historical events, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. Although we believe that these forward-looking statements have a reasonable basis, you should be aware that numerous factors, including the outcome of the Audit Committee's investigation; our ability to obtain financing arrangement or alternatives; changes in domestic and international market conditions; competition; our ability to attract and retain customers; our relationships with introducing brokers; retention of our management team; our ability to manage our growth or integrate future acquisitions, our exposure to significant credit risks with respect to our customers, international operations and exchange membership requirements, the effectiveness of compliance and risk management methods, potential litigation or investigations, employee or introducing broker misconduct or errors, reputational harm, and changes in capital requirements, could cause actual results to differ materially from our expectations. Because of these factors, we caution that you should no place undue reliance on any of our forward-looking statements. Further, any forward looking statement speaks only as of today. It is impossible for us to predict how new events or developments may affect us. The Company disclaims any intention or obligation to update or revise any forward-looking statements, either to reflect new information or developments or for any other reason.
--------------------------------------------------------------------------------

RISK WARNING: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. Before deciding to trade foreign exchange you should carefully consider your monetary objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your deposited funds and therefore you should not speculate with capital that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent advisor if you have any doubts. Past returns are not indicative of future results.

Refco F/X Associates LLC and its affiliates assume no responsibility for errors, inaccuracies or omissions in these materials. They do not warrant the accuracy or completeness of the information, text, graphics, links or other items contained within these materials. Refco F/X Associates LLC and its affiliates shall not be liable for any special, indirect, incidental, or consequential damages, including without limitation losses, lost revenues, or lost profits that may result from these materials. This email is not a solicitation to buy or sell currency. All information contained in this e-mail is strictly confidential and is only intended for use by the recipient. All e-mail sent to or from this address will be received by the Refco F/X Associates LLC corporate e-mail system and is subject to archival and review by someone other than the recipient. Refco F/X Associates LLC is compensated for its services through the spread between the bid/ask prices.



Hi Michal,
Thanks for posting that notice.
1. I'll believe it when I see it.
2. As fast as I can, I'll be a former client.
FD1

Ali Son
rank: 150+ posts
rank: 150+ posts
Posts: 179
Joined: Sun May 28, 2006 1:30 am
Reputation: 0
Location: Boston, MA
Gender: None specified

Postby Ali Son » Fri Jul 14, 2006 3:50 pm

Based on my legal background and with the limited info given, per the agreement, the Bankruptcy Trustee will make sure you get your due--no guarantee of 100% though. Could be some formula will be used.

User avatar
michal.kreslik
rank: 1000+ posts
rank: 1000+ posts
Posts: 1032
Joined: Sat May 13, 2006 2:40 am
Reputation: 0
Location: Monte Carlo, Monaco
Real name: Michal Kreslik
Gender: Male
Contact:

Postby michal.kreslik » Fri Jul 14, 2006 4:11 pm

I guess the first thing any former Refco client would do after Gain or any other company would buy Refco, would be to withdraw his funds from his account.

Doesn't sound like a good business idea for the prospective buyer of Refco, unless we are missing something that is going on behind the scenes.

Please add www.kreslik.com to your ad blocker white list.
Thank you for your support.

fatdog1
rank: 150+ posts
rank: 150+ posts
Posts: 164
Joined: Thu May 18, 2006 11:58 am
Reputation: 0
Gender: Male
Contact:

Postby fatdog1 » Fri Jul 14, 2006 4:39 pm

michal.kreslik wrote:I guess the first thing any former Refco client would do after Gain or any other company would buy Refco, would be to withdraw his funds from his account.

Doesn't sound like a good business idea for the prospective buyer of Refco, unless we are missing something that is going on behind the scenes.


From what I read, it could be over 6 months before all my funds are available to for withdrawl.
Some kind of sliding scale.
If the usual 85% of the 15k clients lose, Gain won't even feel it.

fatdog1
rank: 150+ posts
rank: 150+ posts
Posts: 164
Joined: Thu May 18, 2006 11:58 am
Reputation: 0
Gender: Male
Contact:

Postby fatdog1 » Fri Jul 21, 2006 11:01 pm

fatdog1 wrote:
michal.kreslik wrote:I guess the first thing any former Refco client would do after Gain or any other company would buy Refco, would be to withdraw his funds from his account.

Doesn't sound like a good business idea for the prospective buyer of Refco, unless we are missing something that is going on behind the scenes.


From what I read, it could be over 6 months before all my funds are available to for withdrawl.
Some kind of sliding scale.
If the usual 85% of the 15k clients lose, Gain won't even feel it.




Ad Hoc Committee of Refco F/X Customers Files Objection to Gain Capital Offer to Purchase Accounts

Download this press release as an Adobe PDF document.




In response to an offer made by Gain Capital to purchase the approximately 17,000 retail Refco F/X Accounts affected by the bankruptcy of futures trading giant Refco, the Ad Hoc Committee of Refco F/X Customers filed an objection asserting that the offer fails to meet even the minimum standards required for sale approval under current bankruptcy laws. The motion was filed in Case No. 05-60006 in US Bankruptcy Court, Southern New York District, by Attorneys Todd E. Duffy, Esq. and James E. Atkins, Esq. of Duffy and Amedeo, LLP who are representing the Committee.

(PRWEB) July 14, 2006 -- On July 13, 2006, the Ad Hoc Committee of Refco F/X Customers, http://www.refcofxaccountholders.com, filed an objection to the proposed sale of the Refco F/X customer list to Gain Capital. The objection was filed in Case No. 05-60006 by its attorneys, Todd E. Duffy, Esq. and James E. Atkins, Esq. of Duffy and Amedeo, LLP, (http://www.duffyamedeo.com) in US Bankruptcy Court, Southern New York District. In its objection, the group asserts that Refco’s offer fails to meet even the minimum standards required for sale approval under the bankruptcy laws.

In a NY Post Article dated, July 13, 2006, members of the coalition scoffed at the offer as it requires them to deposit additional funds, then trade their accounts at unrealistic activity levels in order to repossess even a fraction of the funds they entrusted to Refco from their retirement or savings accounts. These 17,000 accounts have been frozen since Refco, Inc. filed for Bankruptcy protection in October of 2005. Says group spokesperson, Joe Rowan, “Its another case of the little guy being taken advantage of after being told their money was safe. This is just one in a long list of attempts by Refco and other larger financial institutions to breach the trust that was extended to all of us at the time we opened our foreign exchange trading accounts at Refco FX.”

Refco F/X Associates, LLC is a subsidiary of Refco Inc. who filed for bankruptcy on October 17, 2005, one week after the company confessed that former chief executive Phillip Bennett had hidden $430 million of bad customer debt.

User avatar
michal.kreslik
rank: 1000+ posts
rank: 1000+ posts
Posts: 1032
Joined: Sat May 13, 2006 2:40 am
Reputation: 0
Location: Monte Carlo, Monaco
Real name: Michal Kreslik
Gender: Male
Contact:

Postby michal.kreslik » Sat Jul 22, 2006 10:14 pm

"as it requires them to deposit additional funds, then trade their accounts at unrealistic activity levels in order to repossess even a fraction of the funds they entrusted to Refco"

Is Gain jesting or what??

I'd like to see the exact wording of the Gain's proposal since they must either
  1. be insane, or
  2. assume the former Refco clients are insane


Michal

Please add www.kreslik.com to your ad blocker white list.
Thank you for your support.


Return to “brokers”