Corporate Governance Issues at Refco Inc.

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

Case Details:


Case Code : CGOV006 For delivery in electronic format: Rs. 400;
For delivery through courier (within India): Rs. 400 + Rs. 25 for Shipping & Handling Charges


Business Ethics, Corporate Governance, Corporate scams / Controversies

Case Length : 19 Pages
Period : 2005-2006
Pub Date : 2006
Teaching Note : Available
Organization : Refco Inc.
Industry : Financial Services
Countries : USA


Refco Inc. was the largest independent futures brokerage firm in the world. The case details the growth of Refco from a small commodities futures trading firm to a company offering brokerage services in futures, securities, and capital markets. It describes the accounting fraud perpetrated by Refco's CEO and the events that followed immediately after the news was made public. It also provides an account of the investigations that were made into the various entities involved in the scandal. The case ends with an analysis of the situation.


To understand the importance of investor/customer trust

To appreciate the importance of business ethics

To know more about investor protection laws and their limitations


  Page No.
Introduction 1
Background Note 2
The Bennett Era 3
Going Public 5
The Beginning of the End 5
Refco's Announcement and its Fallout 6
The Investigations 8
What Really Happened 9
Outlook 14
Exhibits 15


Refco Inc, Refco Capital, US Futures industry , Investor protection laws , Top management fraud, Misrepresentation of accounts, BAWAG, Lee Partners, Sarbanes-Oxley Act, Corporate governance, Business ethics

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