Trusts sue Refco advisers for $500 million

(Adds details on lawsuit, comments from defendants and background of other suits)

NEW YORK, Aug 27 (Reuters) - Trusts representing Refco Inc. creditors said on Monday they had sued the now defunct futures and commodities broker's legal and accounting advisers for more than $500 million on behalf of 75 foreign exchange customers.

The Refco Litigation Trusts said the lawsuit filed in New York State Supreme Court is against accounting firms Ernst & Young LLP [ERNY.UL] and Grant Thornton, law firm Mayer, Brown, Rowe & Maw LLP and Refco insiders.

The lawsuit alleges that Refco insiders, with the help of advisers, induced forex customers to entrust their funds with the Refco Capital Markets broker-dealer.

They then used the customers' assets as a "personal piggy bank" to fund other Refco businesses, the trusts allege.

Mayer Brown and Grant Thornton did not have immediate comments. An E&Y spokesman declined to comment, saying they had not seen the suit. Refco and 23 affiliates filed for Chapter 11 bankruptcy on Oct. 17, 2005, a week after revealing that former Chief Executive Philip Bennett hid $430 million of debt. The company had gone public two months earlier and later liquidated its operations.

The lawsuit is the latest in a series of cases stemming from Refco's collapse, and the third case filed by the trusts.

The trusts have a broad mandate to pursue claims on behalf of Refco and its creditors, and intend to bring additional lawsuits, Marc Kirschner, the trustee, said.