Updated from 8:32 a.m. EDTRefco ( RFX), the scandal-tarred derivatives brokerage, confirmed Monday that it is in advanced negotiations with hedge fund J.C. Flowers to acquire most of its futures trading and clearing operation. "The company expects that it will reach a memorandum of understanding with J.C. Flowers & Co. Group shortly and will execute definitive agreements soon thereafter," Refco said Monday. But it gave no assurance that such a deal for Refco LLC will be completed. Refco, struggling to stay alive after CEO Phillip Bennett was arrested last week and charged in a $430 million accounting fraud, was reportedly talking to potential suitors for the futures operation. Goldman Sachs ( GM), one of the three lead underwriters on Refco's $583 million IPO in August, advised the New York-based brokerage in the negotiations. In the aftermath of the accounting scandal, Refco has shuttered its offshore capital markets group and its U.S.-regulated securities brokerage. It's possible Refco could seek bankruptcy protection for its remaining operations if it can sell the futures business, which is one of the biggest in the nation. Shares of Refco, which have fallen from a post IPO high of nearly $30 a share to $7.90, remain halted on the New York Stock Exchange. Goldman Sachs is feverishly trying to find a buyer to help Thomas H. Lee Partners, a Boston-based buyout firm, exit the mess. A year ago, Thomas H. Lee sank $507 million into Refco in exchange for a 49% equity stake. In Refco's $583 million IPO, the buyout firm raked in about $165 million, but it still owns 40% of the company's stock. Last Wednesday, federal prosecutors in New York charged Bennett with one count of securities fraud in the scandal. They alleged that the 57-year-old executive secreted $430 million in bad debts owed to Refco to a separate company he controlled. The debt -- run up by Refco customers over seven years and unlikely to be repaid -- showed up on Refco's balance sheet as a cleaned-up receivable, its connection to Bennett masked by accounting sleight-of-hand involving yet another unaffiliated party. The scheme, according to prosecutors and sources, began with a series of $335 million loans made by Refco Capital Markets to Liberty Corner Capital Strategies, a Summit, N.J., hedge fund that's part of a $15 billion conglomerate managed by Terrence Pigott, a former executive vice president of asset management at Daiwa Securities. Liberty Corner then turned around and lent Bennett's Refco Group Holdings $335 million, charging Bennett a higher interest rate than it was paying Refco.