Abstract

Refco Inc. was the largest independent futures brokerage firm in the world. The case details the growth of Refco from a small commodities futures trading firm to a company offering brokerage services in futures, securities, and capital markets. It describes the accounting fraud perpetrated by Refco’s CEO and the events that followed immediately after the news was made public. It also provides an account of the investigations that were made into the various entities involved in the scandal. The case ends with an analysis of the situation.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Understand the importance of investor/customer trust
• Appreciate the importance of business ethics
• and Know more about investor protection laws and their limitations.

Keywords

Refco Inc, Refco Capital, US Futures industry, Investor protection laws, Top management fraud, Misrepresentation of accounts, BAWAG, Lee Partners, Sarbanes-Oxley Act, Corporate governance, Business ethics