Refco forex customers move closer to restitution

RefcoFX customers whose accounts are still frozen from the Refco debacle may not have to wait much longer.

In early December, a U.S. Bankruptcy judge approved the bidding procedures for the more than 15,000 retail accounts still in limbo. Forex Trading (FXCM) and RefcoFX have reached an agreement that would give FXCM control of RefcoFX in exchange for $110 million (see “FXCM rescues Refco’s retail forex customers,” Currency Trader, December 2005). Judge Robert Drain has set an auction date for Jan. 26, meaning other firms interested in RefcoFX’s assets could still make a bid.

If more than one firm is interested, an auction would be held. Either way, Drain would hold a hearing the next day to approve the sale.

RefcoFX is hopeful the deal will close in February, at which time all RefcoFX positions and orders wouldbe transferred in whole to FXCM. Account holders would have access to 100 percent of their funds on deposit, and would be able to withdraw funds whenever desired.

“We are gratified with the court’s approval of the bidding procedures and look forward to completing the sale process quickly,” said Robert Dangremond, Refco’s chief executive officer, in a statement.

Any bids besides FXCM’s would also have to include a guarantee that customer accounts would be transferred in whole.