For a more complete history on the scandal which made it collapse, it's best to read the wikipedia link:
USA Today also wrote a great article outlining REFCO's past:
Refco's flameout ends history of ups, downs
At the time of it's collapse I was actually a REFCO client because the clearing firm at the CME I used and still am loyal to, ultimately used REFCO to handle the backend of their clearing business. When the initial news of the liquidity troubles REFCO had started to leak out, I and those in the same trading group all withdrew excess funds in our accounts as a matter of caution. One thing I'll never forget is standing in line w/a bunch of traders to pickup or request checks at the clearing firm while the head of the firm, who looked like he hadn't slept in days, was nearby explaining not to panic. There is an wise saying that "when large amounts of money are involved, it's advisable to trust no one" even though it turned out that no customers on any exchange suffered damages because the clearinghouses segregated all client funds. Those who traded in the OTC market or with REFCO's retail currency trading arm were not so lucky and had to take losses because their funds were unsecured.
The most staggering part of the collapse was that REFCO had it's IPO just weeks before and a famous private equity group invested in them leading up to the IPO. Although the timing certainly surprised me, it didn't shock me that the REFCO would flame out in some foul manner as this was after all the firm which handled Hillary Clinton's famous cattle trades. Reputation is everything in most businesses but especially trading and a lot of people paid a high cost for disregarding the warning signs and dealing with REFCO.