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Praise for GATA''s presentation at the Toronto Resource Investment Conference
By Hamish Risk
Bloomberg News Service
Sunday, October 16, 2005
http://quote.bloomberg.com/apps/news?
pid=10000006&sid=aTupI6O.rkeo&refer=home
Refco Inc., the futures broker that's under investigation for
securities fraud, may be split in two as Goldman Sachs Group Inc.,
its financial adviser, seeks takeover offers, three people familiar
with the plan said.
Refco's regulated units, which offer futures contracts traded on
exchanges, may be broken off from parts that aren't regulated and
sold separately, said the people, who asked not to be identified
because talks are ongoing. Man Group Plc, the world's largest hedge
fund company and a futures broker, is among those involved in the
discussions, two of the people said.
New York-based Refco's disclosure on Oct. 10 that former Chief
Executive Phillip Bennett hid $430 million in bad debts led
customers to abandon the company, threatening its solvency. A buyer
would get the largest provider of customer transactions to the
Chicago Mercantile Exchange, the biggest U.S. futures market.
"Looking for a buyer is probably the best option they have," James
Bianco, president of bond research firm Bianco Research LLC in
Chicago, said in an Oct. 14 interview.
Refco Securities LLC, the company's largest unit, which offers
exchange-traded futures, is winding down outstanding positions and
avoiding new business. The unregulated Refco Capital Markets Ltd.
has a block on client withdrawals because it doesn't have enough
cash.
Calls seeking comment from Rob Solomon, a Refco spokesman in New
York, weren't returned. Refco's general counsel, Dennis Klejna,
didn't return a call placed to his New York office.
The sales under discussion would end the independence of a 36-year-
old company that less than two weeks ago was considered so healthy
its shares were trading near their record high. With the trust and
confidence of its clients and trading partners gone, Refco has few
chances of surviving on its own.
New York-based Goldman helped manage Refco's share sale in August,
with Credit Suisse First Boston and Bank of America Corp. The banks
may be liable for shareholder losses, Bianco said on Oct. 14.
"The people who brought them public realize they have a huge
liability, especially after doing due diligence two months ago,"
Bianco said.
The Financial Times yesterday reported that London-based Man Group
is involved in the takeover talks, without saying how it got the
information. Lachlan Johnston, a spokesman in London for Man
Financial, a unit of Man Group, and Goldman spokesman Lucas Van
Praag in New York declined to comment.
Refco puts together buyers and sellers of exchange-traded
derivatives such as interest-rate futures, and arranges contracts
bought and sold over-the-counter, according to its Web site. The
company employs 2,400 people in 14 countries and had more than
200,000 accounts.
The Securities and Exchange Commission, the U.S. Attorney's office
and the CFTC expanded their coordinated probe late last week.
Investigators who initially focused on the bad debts they believe
Bennett, 57, hid, are investigating whether there was other
misconduct or possible fraud at the company.
Christopher Cox, chairman of the SEC, declined to comment directly
on the Refco case when asked about it by reporters during his visit
to China with Treasury Secretary John Snow and Federal Reserve
Chairman Alan Greenspan. "The SEC has an enforcement interest in
that specific case," Cox said.
U.S. officials are in China to participate in the U.S.-China Joint
Economic Committee meetings.
Derivatives trading that takes place on exchanges such as the
Chicago Mercantile Exchange is regulated by the federal government,
and trades are backed by a central clearinghouse funded by all
brokers that participate in the exchange. Over-the-counter
derivatives trading is largely unregulated, so if one participant in
a transaction defaults, there isn't a central clearinghouse to back
the trade.
Refco processed 654 million derivative contracts in the fiscal year
ended Feb. 28, 2005, more than what was traded at the Chicago Board
of Trade, the Chicago Board Options Exchange, or the New York
Mercantile Exchange during the same period.
Trading in global futures markets rose 31 percent in 2004 to $1,144
trillion, according to the Bank for International Settlements in
Basel. A derivative is a financial obligation whose value is derived
from interest rates, the outcome of specific events, or the price of
underlying assets such as debt, equities and commodities.
Refco Securities, the regulated unit that accounts for more than
half of the broker's gross revenue, on Oct. 14 began unwinding
proprietary and client positions and said it won't seek new
business.
Other brokers and investors may lose money should Refco become
insolvent. As counterparty, Refco may act as a buyer or a seller, so
if the company runs out of cash to honor its side of the trade, the
other party won't get paid.
Refco also maintains accounts for trading clients, providing loans
for them to make leveraged bets. If Refco runs short of cash as its
business deteriorates, it may be unable to meet requests to withdraw
from those accounts.
Trading in Refco's shares was halted on Oct. 13 at $7.90, 64 percent
lower than their IPO price of $22. Boston-based Thomas H. Lee
Partners LP, which bought Refco's shares at $8 when the broker was
still a closely held company, owns 40 percent.
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FOR DAILY MONITORING OF GOLD
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NEWS AND ANALYSIS
Free sites:
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http://www.usagold.com/amk/usagoldmarketupdate.html
http://www.capitalupdates.com/
http://www.silver-investor.com
http://www.thebulliondesk.com/
http://www.goldismoney.info/index.html
http://www.minersmanual.com/minernews.html
http://www.a1-guide-to-gold-investments.com/euro-vs-dollar.html
http://www.investmentrarities.com
http://www.kereport.com
(Korelin Business Report -- audio)
http://www.plata.com.mx/plata/home.htm
(In Spanish)
http://www.plata.com.mx/plata/plata/english.htm
(In English)
http://www.resourceinvestor.com
http://www.goldpennystocks.com/
Subscription sites:
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http://www.interventionalanalysis.com
http://www.investmentindicators.com/
Eagle Ranch discussion site:
http://os2eagle.net/checksum.htm
Ted Butler silver commentary archive:
http://www.investmentrarities.com/
----------------------------------------------------
COIN AND PRECIOUS METALS DEALERS
WHO HAVE SUPPORTED GATA
AND BEEN RECOMMENDED
BY OUR MEMBERS
Blanchard & Co. Inc.
909 Poydras St., Suite 1900
New Orleans, Louisiana 70112
888-413-4653
http://www.blanchardonline.com
Centennial Precious Metals
3033 East First Ave., Suite 807
Denver, Colorado 80206
1-800-869-5115
http://www.USAGOLD.com
Michael Kosares, Proprietor
cpm@usagold.com
Colorado Gold
222 South 5th St.
Montrose, Colorado 81401
http://www.ColoradoGold.com
Don Stott, Proprietor
1-888-786-8822
Gold@gwe.net
El Dorado Discount Gold
Box 11296
Glendale, Arizona 85316
http://www.eldoradogold.net
Harvey Gordin, President
Office: 623-434-3322
Mobile: 602-228-8203
harvey@eldoradogold.net
Gold & Silver Investments Ltd.
Mespil House
37 Adelaide Rd
Dublin 2
Ireland
+353 1 2315260/6
Fax: +353 1 2315202
http://www.goldinvestments.org
info@gold.ie
Investment Rarities Inc.
7850 Metro Parkway
Minneapolis, Minnesota 55425
http://www.gloomdoom.com
Greg Westgaard, Sales Manager
1-800-328-1860, Ext. 8889
gwestgaard@investmentrarities.com
Kitco
178 West Service Road
Champlain, N.Y. 12919
Toll Free:1-877-775-4826
Fax: 518-298-3457
and
620 Cathcart, Suite 900
Montreal, Quebec H3B 1M1
Canada
Toll-free:1-800-363-7053
Fax: 514-875-6484
http://www.kitco.com
Lee Certified Coins
P.O. Box 1045
454 Daniel Webster Highway
Merrimack, New Hampshire 03054
http://www.certifiedcoins.com
Ed Lee, Proprietor
1-800-835-6000
leecoins@aol.com
Lone Star Silver Exchange
1702 S. Highway 121
Suite 607-111
Lewisville, Texas 75067
214-632-8869
http://www.discountsilverclub.com
Miles Franklin Ltd.
3015 Ottawa Ave. South
St. Louis Park, Minn. 55416
1-800-822-8080 / 952-929-1129
fax: 952-925-0143
http://www.milesfranklin.com
Contacts: David Schectman,
Andy Schectman, and Bob Sichel
Missouri Coin Co.
11742 Manchester Road
St. Louis, MO 63131-4614
info@mocoin.com
314-965-9797
1-800-280-9797
http://www.mocoin.com
Resource Consultants Inc.
6139 South Rural Road
Suite 103
Tempe, Arizona 85283-2929
Pat Gorman, Proprietor
1-800-494-4149, 480-820-5877
Metalguys@aol.com
http://www.buysilvernow.com
Swiss America Trading Corp.
15018 North Tatum Blvd.
Phoenix, Arizona 85032
http://www.swissamerica.com
Dr. Fred I. Goldstein, Senior Broker
1-800-BUY-COIN
FiGoldstein@swissamerica.com
The Moneychanger
Box 178
Westpoint, Tennessee 38486
http://www.the-moneychanger.com
Franklin Sanders
1-888-218-9226, 931-766-6066
----------------------------------------------------
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c/o Chris Powell, Secretary/Treasurer
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USA
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Discover) over the Internet:
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Donors of $1,000 or more will, upon request,
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Donors of $200 or more will receive copies
of "The ABCs of Gold Investing" by Michael
Kosares, proprietor of Centennial Precious
Metals in Denver, Colorado, and "The Coming
Collapse of the Dollar" by James Turk and
John Rubino.
GATA is a civil rights and educational
organization under the U.S. Internal Revenue
Code and contributions to it are tax-deductible
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