For a second time, customers of RefcoFX.com had their hopes dashed, as another deal to buy the unregulated forex arm of the bankrupt futures brokerage fell through.

Refco and Gain Capital agreed to a deal in July that would have been worth at least $2.5 million and eventually given Refco customers their entire account balances back.

The deal fell through in late July, though, with Refco saying in a statement the two sides both agreed to cancel the deal because “they were unable to reach terms on a final asset purchase agreement.”

However, deciding on a final price was only part of the issue. According to a Gain Capital spokesperson, the deal was snagged because of a lack of automation on the part of RefcoFX.

Gain says Refco customers’ account info wasn’t electronically updated, forcing Gain to manually look through 17,000 folders if the deal went through.

Refco claims it has customer information stored electronically, but admitted it may not have been compatible with Gain’s system. It also said there were other reasons the deal did not go through, but did not give specifics.

While RefcoFX.com has been in limbo since its parent company declared bankruptcy in October 2005 and all account balances have been frozen (i.e., no funds can be deposited or withdrawn), customers were still allowed to trade.

However, in late July, Refco informed its forex customers that, “As a result of its inability to enter into a final asset purchase agreement, RFXA [Refco FX Associates] plans to terminate its agreement with FXCM, the company that services RFXA’s Web-based platform as of July 31, 2006.

Thereafter, customers will no longer be able to trade on the Refcofx.com web-based platform.”

As a result, RefcoFX customers will have to go through the bankruptcy courts to reclaim their money. RFXA told its clients that it believes they can make a claim for their final account balance (i.e., the amount as of July 31); the bankruptcy court may only allow claims for account balances on the day Refco declared bankruptcy.

Ironically, it was FXCM that initially thought it had a deal with Refco for the purchase of the forex accounts. However, their agreement dismantled earlier this year when Refco refused to accept the final offer because it believed it could get a better deal.

Many Refco customers were against the Gain deal because it did not immediately free up their assets. In some cases, Refco clients would not be fully reimbursed for more than two years, and only if they maintained a minimal level of trading.

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