Refco creditors sue lawyers, acccountants

Trusts representing creditors of defunct commodities broker Refco Inc. are suing its legal and accounting advisers for more than $500 million on behalf of 75 foreign exchange customers.
The Refco Litigation Trusts said the lawsuit, which was filed in New York State Supreme Court, named accounting firms Ernst & Young LLP and Grant Thornton LLP, according to a Reuters report.
The suit is the third brought by the trusts, which filed a similar action in Illinois last week for $2 billion.
It named the same defendants along with PricewaterhouseCoopers LLP, Banc of America Securities, Credit Suisse Securities and Deutsche Bank Securities.
The lawsuit contends that Refco insiders, with the help of advisers, encouraged foreign-exchange customers to invest their funds with the Refco Capital Markets broker-dealer unit.
The unit then used the customers’ assets as a “personal piggy bank” to finance other Refco businesses, the trusts said.
Refco and 23 of its affiliates sought bankruptcy protection on Oct. 17, 2005, one week after disclosing that former chief executive, Phillip R. Bennett, hid $430 million of debt.