Refco Faces SEC Charges in Short-Selling Probe

A wide-ranging investigation into stock manipulation in the private-placement market has tripped up Refco, a brokerage that last month filed plans for an initial public offering.

The New York firm disclosed late Monday that the Securities and Exchange Commission is considering filing civil charges against it over short sales in shares of Sedona, a tiny Pennsylvania software company.

The looming action against Refco stems from a 2003 SEC enforcement action against Rhino Advisors, a defunct investment firm that regulators charged with manipulating shares of Sedona following a $3 million private stock placement in 2001. ...