Two accountancy firms face threats of legal action over their role in alleged fraud at Refco.
Joshua Hochberg, the US examiner investigating the collapsed broker’s bankruptcy case, has told Refco’s creditors they have strong claims for professional negligence against Ernst & Young and Grant Thornton, alongside US law firm Mayer, Brown, Rowe & Maw, according to reports.
Refco filed for bankruptcy in October 2005, a week after it was revealed that Phillip Bennett, its former chief executive, had disguised a $430m (£215m) debt he owed to the company.
E&Y, which provided tax advice to Refco but resigned in 2003, said: ‘We believe our tax work fully complied with professional standards.’ The firm added it resigned after Refco’s former management refused to allow the firm to meet with its outside auditors.
Grant Thornton, which served as Refco’s auditor, said: ‘Our audit work met professional standards and statements by the examiner for the bankruptcy estate do not reflect the context or the facts as we know them to be.’