Shareholder Class Action Filed on Behalf of Shareholders of Refco, Inc. by the Law Firm of Schiffrin & Barroway, LLP

20 October 2005

Notice is hereby given that a class action lawsuit was filed in the United States District Court for the Southern District of New York on behalf of all securities purchasers of Refco, Inc. (OTC: RFXCQ - News; formerly NYSE: RFX) ("Refco" or the "Company") between August 11, 2005 and October 13, 2005, inclusive (the "Class Period"), including purchasers of Refco stock pursuant or traceable to the registration statement as amended on August 10, 2005 ("Registration Statement"), and the prospectus dated August 11, 2005 issued in connection with the Company's initial public offering on or about August 11, 2005 (the "Offering" or the "IPO").

If you wish to discuss this action or have any questions concerning this notice or your rights or interests with respect to these matters, please contact Schiffrin & Barroway, LLP (Darren J. Check, Esq. or Richard A. Maniskas, Esq.) toll-free at 1-888-299-7706 or 1-610-667-7706, or via e-mail at info@sbclasslaw.com.

The complaint charges Phillip R. Bennett, Gerald M. Sherer, Leo R. Breitman, Nathan Gantcher, David V. Harkins, Scott L. Jaeckel, Thomas H. Lee, Ronald L. O'Kelley, Scott A. Schoen, Grant Thornton LLP, Credit Suisse First Boston, Goldman Sachs & Co., Banc Of America Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Deutsche Bank Securities, Inc., J.P. Morgan Securities Inc., Liberty Corner Capital, and Refco Group Holdings Inc. with violations of the Securities Exchange Act of 1934. More specifically, the Complaint alleges that the Company failed to disclose and misrepresented the following material adverse facts which were known to defendants or recklessly disregarded by them: (1) that an entity controlled by defendant Bennett owed the Company as much as $545 million in a scam designed to hide bad debt; (2) that the Company failed to account for the $545 million in bad debt thereby materially inflating its financial results; (3) that the Company lacked adequate internal controls; (4) that the Company's financial results were in violation of Generally Accepted Accounting Principles ("GAAP"); and (5) that as a result of the foregoing the Company's financial results were materially inflated at all relevant times.

On October 10, 2005, Refco shocked the market when it announced it had discovered, through an internal review, a receivable owed to the Company by an entity controlled by defendant Bennett in the amount of approximately $430 million, that Bennett was stepping down, and that Company financial statements issued since 2002 could no longer be relied upon. After digesting this news, the market acted swiftly and negatively. By the end of the day on October 10, 2005, shares of Refco fell $12.96 per share, or 45.3 percent, to close at $15.60 per share on heavy trading volume.

Shares of Refco fell even further on October 11, 2005, when a more than five-hour halt on trading was lifted at the New York Stock Exchange ("NYSE"), following the additional disclosure that the sum of $430 million receivable was largely comprised of uncollectible debts dating as far back as 1998. By the day's end, shares of Refco were down $1.75 per share, or 11.22 percent, to close at $13.85. On October 12, 2005, the United States Attorney for the Southern District of New York announced that defendant Bennett had been arrested and charged in a criminal complaint with having defrauded investors in the initial public offering of securities in Refco by hiding that hundreds of millions of dollars owed to Refco was in fact owed by a company Bennett himself controlled. At the close of trading on October 12, 2005, shares of Refco fell an additional $3.00 per share, or 21.66 percent, to close at $10.85 per share on heavy trading volume.

On October 13, 2005, trading of Refco shares was delayed at the opening of the market pending news from the Company. At approximately 11:30 a.m., Refco announced that in light of recent events, the liquidity within Refco Capital Markets, Ltd., was no longer sufficient to continue operations. The Company had therefore imposed a 15-day moratorium on all activities of Refco Capital Markets, Ltd. Following this revelation, on October 13, 2005, the NYSE again halted the trading of Refco's shares. At the time of the trading halt, Refco's stock was trading at $7.90 per share, which represented a loss of $2.95 per share, or 27.19 percent.

The final blow for Refco occurred on October 18, 2005, when Refco filed for Chapter 11 bankruptcy protection after cutting a deal to sell its primary business to a group led by hedge fund J.C. Flowers & Co. LLC. Following this news, the NYSE lifted the halt on trading. Shares of Refco plunged $7.25 per share, or 91.77 percent, to close at $0.65 per share on October 18, 2005.

Plaintiff seeks to recover damages on behalf of class members and is represented by the law firm of Schiffrin & Barroway, which prosecutes class actions in both state and federal courts throughout the country. Schiffrin & Barroway is a driving force behind corporate governance reform, and has recovered billions of dollars on behalf of institutional and individual investors from the United States and around the world. For more information about Schiffrin & Barroway, or to sign up to participate in this action online, please visit http://www.sbclasslaw.com.

If you are a member of the class described above, you may, not later than December 12, 2005 move the Court to serve as lead plaintiff of the class, if you so choose. A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member's claim is typical of the claims of other class members, and that the class member will adequately represent the class. Under certain circumstances, one or more class members may together serve as "lead plaintiff." Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. You may retain Schiffrin & Barroway, or other counsel of your choice, to serve as your counsel in this action.

Source: PR Newswire

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