A bevy of class action suits against Refco may bring little joy to investors after the company filed for bankruptcy on 18 October. But law firms immediately turned their attention to Refco's auditors, underwriters and officers.
At least 17 different law firms have filed class action suits against Refco Inc and other related entities including Refco's auditor Grant Thornton and underwriters Goldman Sachs, Banc of America and CSFB.
One investment banking source said that the only entity involved in the IPO which may be able to indemnify itself was Grant Thornton. According to Refco's S-1 IPO filing made to Securities and Exchange Commission (SEC), Grant Thornton had pointed to potential "significant deficiencies" in Refco's reporting practices.
In the document these deficiencies were described, according to Public Company Accounting Oversight Board, as liable to result in "more than a remote likelihood that a mis-statement of the financial statements that is more...