The other day I posted about Rob Kirby’s article Failure To Deliver Or “Deliverence”? I was intrigued by this reference to Refco at the end of his article:
The authors of this ground-breaking research go on to explain how and why the brokerage Refco failed. It explains the most likely or at least offers a highly plausible explanation as to the fallout and continuing danger [another closely guarded secret of officialdom] the Refco collapse still poses to the financial system.
Matthew Goldstein reported that regarding Refco,
Judge Robert Drain issued the freeze order on Dec. 15 in a closed-door proceeding with lawyers from Milbank Tweed Hadley & McCloy, the big New York law firm that’s representing Refco’s many creditors. In a rare move, all the court filings in the action have been sealed by the court and are not available to the public. The judge also has agreed to hold all future hearings in the case out of the public eye.The secrecy surrounding the action is unusual for a civil proceeding. In court papers, lawyers from Milbank Tweed contend the secrecy is needed to prevent “irreparable harm” to the creditors and third parties. (emphasis added)
So what is it that is being kept secret? U.S. Attorney Michael Garcia in Manhattan has spoken of “$431 Million pool that gets marked to market” but would not say what it is. Is it a cess pool of Fails to Deliver (FTDs) that could cause a short squeeze of systemic proportions?
Refco Fails To Deliver Michael Garcia Matthew Goldstein Mover Mike