Refco, reeling from the disclosure that its chief executive officer hid unpaid debts, blocked client withdrawals from a unit that doesn’t have enough cash to stay in business.

Refco, the biggest independent American futures broker, named a former chairman of the Securities and Exchange Commission, Arthur Levitt, and a former comptroller of the currency, Eugene Ludwig, as advisers, the company said yesterday in a statement.

It also hired Goldman Sachs, which helped arrange Refco’s initial public offering, as a financial adviser.

The New York-based firm imposed a 15-day moratorium on withdrawals from Refco Capital Markets and said the liquidity of the unit, “which represents a material portion of the business of the company, is no longer sufficient to continue operations.” Refco’s regulated futures brokerage isn’t affected, the company said.

The collapse in confidence threatens Refco’s survival, a finance professor at Boston University, Mark Williams, said. American authorities charged the former Refco CEO Phillip Bennett with securities fraud on Wednesday, saying he hid $430 million in unpaid debts dating to 1998. Refco said its own accounts for the past three years aren’t reliable.

“It’s the equivalent of a run on the bank, but without the insurance,” said Mr. Williams, a former chief risk officer at Citizens Power, an energy trader.”All Refco really has in the trading and brokerage business is their name, and the marketplace is punishing them.”

Shares of Refco plunged 27% to $7.90 today in pre-open trading on the New York Stock Exchange prior to the company’s announcement. The NYSE said in a later announcement that Ref co shares will continue to be suspended from trading while the exchange “evaluates the need for further disclosure and the continued listing” of Refco.

The stock has tumbled almost 75% since October 7, the last trading day before Mr. Bennett’s role in the alleged fraud was disclosed. Refco’s bond due 2012 plunged 41.75 cents today to 35 cents, pushing the yield to 34% from 15%, according to Trace, the bond price reporting system of the NASD.

Standard & Poor’s and Moody’s Investors Service both lowered their ratings on Refco’s debt this week and said they were considering further downgrades. Some Refco customers and rival brokers said on Wednesday they were switching to other companies and pulling money from their trading accounts. Jerome Israelov, a wheat trader at the Chicago Board of Trade who uses Refco to match his transactions, said he planned to cut the funds he keeps on account at the broker by at least half and that many of his peers are doing the same.

Chicago-based Peregrine Financial Group said it has won clients who ditched Refco this week. Refco had $4.9 billion in customer accounts on August 31, making it the eighth-biggest futures broker by that measure after banks such as Goldman and Citigroup. The capital markets unit is a securities and foreign exchange broker based in Bermuda, according to Refco’s IPO prospectus.

Since Mr. Bennett, a former Cambridge University rugby player, took over Refco in September 1998, the company and its affiliates have been sued at least 110 times, including 40 suits in federal court. Of the suits in federal court, at least 16 claim fraud or securities violations.