In mid-October, accounting firm Grant Thornton LLP was contacted by both the Securities and Exchange Commission and the Public Company Accounting Oversight Board about its role as auditor of Refco Inc.
Both agencies have asked the accounting firm to supply documents relating to its Refco work. A spokesman for Grant Thornton said that the firm is complying with the investigation's information requests.
The investigation by the SEC, the Justice Department and other regulators is reportedly spreading beyond charges already brought against Refco's former chief executive, Phillip Bennett . Bennett reportedly transferred about $430 million in debts to an entity he controlled in an apparent attempt to bolster financial results. The now-bankrupt futures and commodities brokerage company has said that its financial statements since 2002 shouldn't be relied upon.
Grant Thornton, which had stopped short in its audit work of attesting to Refco's internal controls, said in a recent statement that the case appeared to be 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."
