Magazine article Modern Trader

Refco FX to Gain Capital?

Magazine article Modern Trader

Refco FX to Gain Capital?

Article excerpt


Refco retail forex customers still do not have their money and the most recent deal on the table appears worse for them than the one that would have made them whole, which was rejected nearly six months ago by the Refco Creditors Committee, several RefcoFX customers contend.

Gain Capital Group LLC has offered to purchase Refco FX Associates' (RFX) customer and marketing lists for $2.5 million. If the deal is approved by the bankruptcy court, RFX customers have an option to open trading accounts with a division of Gain, starting with a $150 "bonus" in the account from the company and then receive 25% of the total that was in their RFX trading accounts every six months for two years. That is 25% of their own money - if they meet Gain's minimum trading requirements.

Mark Galant, Gain CEO, said, "The Refco FX customers kind of got a raw deal," adding, "We want to do something good for the customers."

While the deal is for the customer accounts, Gain will not receive any customer assets, which are valued at approximately $100 million. According to Refco, customer and trade liabilities exceed $140 million, and RFX is a guarantor of Refco's secured bank debt and unsecured bonds, which total more than $1 billion. Refco's secured lenders also lay claim to approximately $54 million in cash and securities held by RFX. Refco's lawyers have maintained throughout the bankruptcy proceedings that RFX customers are unsecured creditors and that the company intends to keep those customer funds.

Galant says that if the RFX customers do take the Gain offer, they maintain their rights as Refco creditors. …

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