Products July 2, 2010

S&P Unveils CDS Indexes

 Standard & Poor's has launched a series of credit default swap sector indexes. 
Reported by

A news release said the S&P CDS Sector Indices seek to track the credit default swap market for a select number of corporate credits in distinct Global Industry Classification Standard (GICS) sectors and sub industries. 

The S&P CDS Sector Indices are designed to reflect the credit default swap market for a sector of corporate credits, increasing transparency for market participants. The Indices may be country specific or global in nature and will cover a distinct industry segment. They offer the independence of the S&P CDS Index Committee and third-party pricing, the news release said.  

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Each index is designed with a focus on liquidity with the goal of supporting investment products such as index funds, index portfolios, and index futures and options. Each series of the S&P CDS Sector Indices has a 5 1/4 year maturity as measured from its effective date.  

The S&P CDS U.S. Sector Indices are equal weighted, with a given number of reference entities and a fixed coupon. Index levels and average CDS spreads for each index are published daily. 

More information is at www.fixedincomeindices.standardandpoors.com.

Compliance July 2, 2010

Emerson Poynter LLP Probes BP Plan Practices

Yet another law firm is poking around to see if there might be a fiduciary breach at the BP 401(k) plan.

 

Reported by

The latest “entrant” is the law firm of Emerson Poynter LLP, which, according to a press release, has “launched an investigation into possible illegal conduct relating to BP’s 401(k) plan for U.S. employees known as the BP Employee Savings Plan (“ESP”).  The firm, with offices in Little Rock, Arkansas and Houston, Texas, says that it is “investigating whether fiduciaries of the BP Employee Savings Plan may have violated the Employee Retirement Income Security Act of 1974.” 

It notes that “violations may have occurred by continuing to offer and maintain the BP Stock Fund as a BP Employee Savings Plan investment option when it was imprudent to do so,” going on to cite the April 20 explosion on the Deepwater Horizon drilling rig, and the subsequent (and continuing) leaking of millions of gallons of crude oil into the Gulf of Mexico. 

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“The consequences of these events are devastating and will have long-term effects on the Gulf region as well as BP’s financial worth,” according to the law firm, which goes on to note that “since the explosion and eruption of oil, BP’s stock price has fallen by approximately half, accounting for more than $100 billion in lost stock value”.  At the end of 2009, BP’s U.S. Employee Savings Plan had more than $2 billion invested in BP stock, costing participants what the law firm says is “believed to be hundreds of millions of dollars”.

Since the oil rig explosion, a number of firms have announced investigations into the 401(k) plan (see Lanier Law Firm Investigating BP 401(k)), and two participant lawsuits have already been filed (see FL Woman Sues BP Over 401(k) Stock Losses, Ex-Employee Sues BP Over Plan Losses). 

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