Man Group PLC, the world's largest listed hedge fund company, has issued a denial regarding reports that it is attempting to acquire the troubled US brokerage firm Refco, which has become the subject of an investigation by the Securities and Exchange Commission over allegations that former chief executive Phillip Bennett used a hedge fund to hide a $430 million loss.
In a statement issued by Man Group on Monday, the company asserted that: "Contrary to market speculation, Man Group confirms that it is not currently in discussions with Refco or its advisers regarding a Refco acquisition."
The Group also denied that Man has any "direct financial exposure" to Refco.
Newspaper reports over the weekend had claimed that Man Group has been holding preliminary discussions with Refco with a view to buying the company's core futures and brokerage operations.
However, it emerged on Monday that Refco has been holding talks with a group led by investment fund J.C. Flowers & Co. over the sale of its futures and brokerage units, and Reuters reported that the two firms are expected to reach a memorandum of understanding "shortly".
Reuters also reported that US banks Citigroup Inc and JPMorgan & Chase, and French firm Firmat Group, a subsidiary of Societe Generale, have expressed interest in buying various parts of Refco's business.
Goldman Sachs and investment bank Greenhill & Co., have been retained by Refco to help salvage its futures operation, which is the largest independent commodities broker in the US. Refco, which traded more than $10 trillion on the futures markets last year, holds more than $4 billion in client funds. The fate of Refco Capital markets, a subsidiary unit, is unclear after the company released a statement on Friday explaining that liquidity within the company is "no longer sufficient to continue operations".
The SEC has opened an informal inquiry into Refco after the company admitted that $430 million had not been disclosed as a related party transaction, and put its accounts for the last four years under review. A class-action lawsuit was filed in New York alleging Mr Bennett misled investors ahead of its August, 2004 flotation.
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