Rydex Investments has sent a letter to advisors with clients who have invested in its SphinX fund telling them that Rydex has decided to fully repay funds frozen or lost as a result of the bankruptcy of the giant commodities brokerage firm, Refco.

   The funds, estimated at between $18 million and $22 million, will come from Rydex's own resources, according to a letter sent to advisors.

   Rydex said in the letter that it was still working on the mechanics of how this "contribution" would work. The amount of the SphinX fund's assets frozen in bankruptcy are estimated at about 11% of total assets.

   In a letter to advisors on April 26, Rydex told advisors of a proposed settlement "to transfer a sizable portion of the assets back to the creditors of Refco. Rydex was not a party to the settlement and was not consulted regarding the settlement," the letter continued.

   "Should this proposed settlement be approved by the Bankruptcy Court, the assets released to Rydex SphinX shareholders would be less than the full amount of the 11% bankruptcy holdback-a situation that is simply not acceptable to the owners and management team of Rydex Investments."

   While Rydex didn't say precisely when investors would be made whole, it clearly didn't want investors to wait for a resolution via litigation, which could take years.

   The Refco bankruptcy, triggered by the embezzlement of more than $400 million by CEO Philip Bennett, managed to ensnare some of the most sophisticated investors in the world, including the cocky, fast-talking, commodities-touting James Rogers, who was believed to be owed more than $360 million by Refco. Refco's bankruptcy filing shocked Wall Street since it happened less than two months after the firm went public in an IPO led by Goldman Sachs & Co. that raised $1.1 billion. As a private company, it was owned by several big private equity firms including Thomas Lee & Co.

-Evan Simonoff