Refco's Bennett Falls Hard

The company has sought to distance itself from Bennett, claiming only one other executive knew his company was responsible for a $430 million receivable on Refco's balance sheet.

The opaque language Refco has used in press releases to explain the situation hasn't provided much confidence either.

"These obligations were transferred periodically to the entity controlled by Mr. Bennett, and the company's books and records then reflected a receivable from that entity, rather than a receivable from the originating accounts," Refco said. Why Bennett would effect such a transfer was not explained. Generally speaking, a company like Refco, in which Bennett owns a 33% stake, wants to show as few nonperforming loans as possible on its balance sheet.

Bennett's lawyer, Jack Weinberg, declined to comment.

Bennett pocketed more than $118 million in the firm's August initial public offering and also raked in tens of millions of dollars extra from a special post-IPO dividend paid by Refco.

Several other securities industry stocks fell in a weak market Wednesday. Shares of Chicago Mercantile Exchange(CME Quote) lost 3.8%, while Goldman Sachs(GS Quote) lost 1.6%, Bear Stearns(BSC Quote) lost 1.8% and Lehman(LEH Quote) shed 2.2%.