Compliance January 3, 2008

Bush Signs Sudan Divestment Bill into Law

President Bush signed legislation on Monday that makes it easier for mutual funds and private pension funds to sell their investments in companies doing business with Sudan.
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Though the president signed the Sudan Accountability and Divestment Act, Bush’s administration has expressed concern that the bill could interfere with its right to set foreign policy (See Letter Voices Administration’s Sudan Divestment Proposal Opposition). Bush’s signature was accompanied by a proviso known as a signing statement, reserving his authority to overrule state and local divestment decisions if they conflicted with foreign policy, the New York Times reported.

The bill was passed unanimously in both the House and Senate last month. The measure permits U.S. state and local governments, as well as mutual funds and private pension funds, to divest their investments in companies involved in four Sudanese business sectors – oil industry, mineral extraction, power production, and the production of military equipment.

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Additionally, the legislation requires federal government contractors to certify they are not involved in business in these four areas.

In Practice January 2, 2008

Advisers Remain Confident in Economy for 2008

A significant majority of financial advisers are confident in the country’s economic prospects, according to the latest Brinker Barometer from Brinker Capital.
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According to a Brinker news release, 74% of respondents noted they are “very” or “somewhat” confident in the country’s economic outlook, identical to respondents’ sentiments in the first quarter of 2007. Seventeen percent of respondents said they have “little” or “no” confidence in the economy in the fourth quarter of 2007, compared to 18% who said so in the first quarter of 2007.

The confidence index rose slightly with regard to market performance, with 69% of respondents feeling “very” or “somewhat” confident about the markets at the end of 2007, compared to 64% in the first quarter, the release said. Sixteen percent of respondents indicated “little” or “no” confidence in market performance in 2007’s fourth quarter.

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Almost a quarter (22%) of advisers surveyed said a “democrat in the white house” was their single greatest economic worry for 2008. Other economic concerns cited included “Global Unrest” (15%), “U.S. Economic Growth” (15%), “Terrorist Attack” and “Recession” (13% each), “Value of the Dollar” (6%), “Iraq War” (5%), “Republican in White House” (3%), “Inflation” (3%), and “No Major Worry” (4%).

Eighty-one percent of advisers cited an increase in capital gains, an ordinary income tax increase, and an elimination of preferential treatment of dividends as tax concerns in a democratic administration.

In addition, 79% of respondents described themselves as “very” or “somewhat” concerned over the recent increase in investments in U.S. corporations from governments in Abu Dhabi, China, Singapore, and others (See Wall Street Shores Up Finances With Overseas Capital).

The Brinker Barometer reinforces adviser optimism in the economy also indicated in a recent survey by Oppenheimer Funds (See Financial Advisers Concerned About Market Conditions).

A full copy of the Brinker Barometer results for Q4, based on responses from 236 advisers affiliated with insurance companies, independent broker/dealers, and in sole practice, can be obtained by contacting Jemile Dragovic at jdragovic@middlebergcommunications.com.

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