Refco and the IPO Motive

One of the hardest questions to answer in the Refco(RFX Quote) scandal is why Phillip R. Bennett, a Cambridge-educated master trader seemingly assured of a lucrative Wall Street career, would want to cook the books at a company he helped build.

Federal prosecutors, in charging the former Refco CEO with securities fraud, suggest Bennett's main motive in hiding some $430 million in uncollectible debts was the brokerage's initial public offering in August.

But Bennett's alleged deception goes back as far as 1998, years before Thomas H. Lee Partners sank $507 million into Refco and set the stage for its $583 million IPO. ...