Reply #6: Refco speeds from IPO to bankruptcy [View All]

[ozymandius]

Shareholders in newly public brokerage left with nothing

Refco, which has been spiraling into disarray in the past week, said on Monday evening that it has filed for Chapter 11 bankruptcy protection. The beleaguered company also said it reached a preliminary agreement to sell its futures-trading division for $768 million to an investor group led by a former partner of Goldman Sachs.

"The stock is toast," Kevin Starke, a securities analyst at Weeden & Co., said. "There's probably not going to be anything left for shareholders."

After trading over $30 in the month after the IPO in August, Refco shares lost almost two-thirds of their value over the course of two days last week. By the time the stock was halted, they last traded at $7.90.

Weeden's Starke said there'll be few assets left after Refco's businesses are either sold off or closed down. As a result, the only remaining recourse for shareholders probably will be to sue the underwriters of the company's IPO, he said.

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