Refco Trustee Dismisses Last Claim Against Grant Thornton

A trustee representing Refco Inc.’s foreign-exchange customers agreed to dismiss their last claim against Grant Thornton LLP, the defunct firm’s former auditor that clients accused of helping Refco defraud them.

The trustee, Marc Kirschner, sued a group of former Refco executives and outside firms in 2007, claiming $500 million on behalf of customers who lost money deposited with Refco Capital Markets. A judge in 2009 dismissed most of Kirschner’s claims against Grant Thornton, Ernst & Young LLP and Mayer Brown LLP.

The parties agreed yesterday to drop the one remaining claim, that Grant Thornton aided Refco in the fraud, after U.S. District Judge Jed Rakoff ruled the claim would be decided at trial. No details of any settlement between the parties were available from the court.

Refco, once the biggest independent U.S. futures trader, was forced into bankruptcy in 2005 amid claims that executives had schemed to hide more than a billion dollars in losses. Former Refco Chief Executive Officer Phillip Bennett pleaded guilty to fraud and conspiracy and is serving a 16-year prison sentence.

The case is Kirschner v. Bennett, 07-cv-08165, U.S. District Court, Southern District of New York (Manhattan).

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