SEC calls in Grant Thornton over Refco audit

Grant Thornton has confirmed it has been contacted by the Securities and
Exchange Commission and the Public Company Accounting Oversight Board regarding
its audit of Refco.

Both agencies asked the accounting firm three weeks ago to supply documents
relating to its Refco work, and a spokesman for Grant Thornton has confirmed
that it has complied with the requests.

This is seen by analysts as a sign that the investigation by the SEC, the
Justice Department and other regulators is spreading beyond charges already
brought against Refco’s former chief executive, Phillip Bennett.

Bennett has been accused of transferring about $430m in debts to an entity he
controlled in an attempt to bolster Refco’s financial results. The now-bankrupt
futures and commodities brokerage company has confirmed that its financial
statements since 2002 shouldn’t be relied upon.

Grant Thornton, which took on the audit work for Refco’s internal controls,
has said in a statement that at brokerage company there was ‘a purposeful
deception that required participation by senior management, hidden well enough
to also evade numerous other detailed financial inspections performed by many of
the most well-respected financial institutions in the country’.

Related reading