WSJ Financial Flashback: The 2005 Collapse of Refco

By SIMON CONSTABLE

 

20 YEARS AGO 

 

By SIMON CONSTABLE

 

Few people outside Wall Street pay too much attention to commodities traders. But on Oct. 10, 2005, one of the world’s largest commodities brokers, Refco, collapsed. It was shocking news about a seemingly ever-present fixture in the commodities world.

 

“It was kind of like a smaller version of the Enron collapse,” says Art Hogan, chief market strategist at B Riley Wealth Management. It came on the heels of the 2002 Sarbanes–Oxley Act, designed to prevent accounting fraud.

 

The first news of the Refco collapse began when its CEO, Phillip Bennett, stepped down, following the firm’s discovery that another company controlled by Bennett owed Refco $430 million. The debt was described to investors as “receivables,” aka money owed to Refco. 

 

Following the discovery of the debt, Refco advised that financial statements from 2002

onward shouldn’t be relied upon. Refco stated that Bennett had repaid the debt, and the

company had notified authorities.

 

Bennett was sentenced to 16 years in prison in 2008. “Despite the best of intentions, I made an unacceptable and appalling error,” Bennett said at sentencing. He was released in 2020, a judge calling him a “model prisoner.”

 

READ MORE HERE.

Briefings Magazine: ‘ It’s called commodity nationalism.’ The Global Race for Minerals

 By SIMON CONSTABLE

For much of the post-WWII period, buying minerals such as copper, coal, or iron ore was simply a matter of money: Did you have it or not? If your company needed to purchase copper ore, it could get it from Chile, among other places. Likewise, the need for cobalt could be sated with supplies from the Democratic Republic of Congo, Indonesia, or Australia. It more or less didn’t matter which country was selling the product. But that practice of unfettered trade seems to be disappearing, fast—and it has nothing to do with the great tariff wars of 2025. Rather, it's worries about national security. 

Currently, there’s a global race to secure minerals and other commodities. To ensure their own growth, as well as protect and defend themselves, countries around the world want access to vital materials. “It’s called commodity nationalism,” says Pete Earle, director of economics and economic freedom at the American Institute for Economic Research. “Control over oil and minerals is becoming more important.”

Tt was COVID-era changes in international trade that first put the whole issue of supply chains into focus, says Bill Stone, chief investment officer and managing principal at the Glenview Trust Company in Louisville, Kentucky. That period highlighted how susceptible global trade was to interruptions, accidental or otherwise. “When the stakes get big enough, countries will hold back from selling precious materials to other countries,” he says. “The goal is to find their vulnerabilities.” READ more here.

Korn Ferry: Modernizing the Military: Britain's Bold Gamble

When Sarah Brown graduated this year, she surprised her friends by enlisting in the British Army. Her father had done the same two decades earlier. Yet the force she joins looks nothing like his: smaller, leaner, but wired with technology that was the stuff of science fiction in his day. “It doesn’t feel like the Army he knew,” she says. “It feels like the future.”

For many decades, Britain was NATO’s heavyweight spender, pumping more than 4% of GDP into defense every year. But after 1991 the money slowed, and with it the size of the armed forces. Today troop numbers are at historic lows. Now, the government says the pendulum must swing back — modernization and deterrence are the watchwords. “Given the threats, we can’t afford to be unprepared,” says Edward Dinsmore, Korn Ferry’s senior client partner for organizational strategy. “This is about rebuilding readiness.”

READ MORE HERE.

France: Blackberries ripe; Macron's government overripe. @REALConstable, Occitanie @BATCHELORSHOW

By SIMON CONSTABLE

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Ambadeargentina, CC BY-SA 4.0, via Wikimedia Commons

UK: MANSION TAX @REAL CONSTABLE @BATCHELORSHOW

 By SIMON CONSTABLE

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English: NPS staff, Public domain, via Wikimedia Commons

FRANCE: HEAT WAVE LIFTS @REALCONSTABLE @BATCHELORSHOW

 By SIMON CONSTABLE

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H. de Sarrepont, Hennebert Eugène (1826-1896)., Public domain, via Wikimedia Commons

WSJ: FINANCIAL FLASHBACK Decimal Stock Pricing

A look back at Wall Street Journal headlines from this month in history

• 25 YEARS AGO: Decimal Stock Pricing

A quarter-century ago, in August 2000, the New York Stock Exchange and the old American Stock Exchange began shifting their pricing systems to “decimals” from fractions. At the time, it was a big deal, promising benefits by lowering costs and other innovations.

“It was a watershed moment for U.S. equity markets,” says Daryl Jones, director of research at investment analysis company Hedgeye.

Shortly before the switch, The Wall Street Journal started converting its stock listings to decimal form—starting with its Nasdaq list. (It would take several months until Nasdaq itself went decimal for trading, and the NYSE and Amex fully converted for all stocks.)

The longstanding method of U.S. stock pricing—tracing to the 17th century, in fact—used fractions such as 1/8 of 1/16. For instance, a stock priced at $10 1/16 could move up to $10 1/8. But starting in August 2000, stocks began to be priced in increments of 1 cent, which could allow a price of $10.01 or $10.02, etc. READ more here.