UPDATE: Ex-Refco Directors To Pay $39 Million Over Forfeiture Claims

Two former directors of Refco Inc. (RFX) have agreed to pay $39 million to resolve civil forfeiture claims brought by federal prosecutors related to an alleged fraud at the defunct commodities broker.

William L. Graham and Edwin L. Cox Jr. will forfeit a combined $39 million in assets as part of the pact with prosecutors from the U.S. Attorney's office in Manhattan.

Graham served on Refco's board of directors from April to August 1999, while Cox served on Refco's board from September 1998 to June 1999.

Cox and Graham didn't admit any liability as part of the settlement. A lawyer for Graham declined comment Friday, while a lawyer for Cox didn't immediately return a phone call seeking comment Friday.

Refco sought bankruptcy protection in 2005, shortly after the company announced it had discovered $430 million on debt owed to a private entity controlled by Chief Executive Phillip R. Bennett. The company collapsed into bankruptcy less than two months after its initial public offering in 2005.

Prosecutors have alleged Bennett and others at Refco hid the commodity broker's dismal financial picture, including hundreds of millions of dollars of undisclosed debt. Bennett pleaded guilty to securities fraud and other charges in 2008 and was sentenced to 16 years in prison.

-By Chad Bray, Dow Jones Newswires; 212-227-2017; [e-mail]