The Markets January 2, 2007

Jefferies Introduces Small and Mid-Cap Specialty Indices

Jefferies&Company, Inc has announced the introduction of 20 proprietary equity indices to track the performance of small- and mid-cap companies, both domestic and global.
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According to the announcement, the new indices include performance benchmarks of IPOs, companies that have recently repurchased shares or emerged from bankruptcy, and companies in the clean technology and energy sectors, among others. Standard & Poor’s has been chosen by Jefferies to calculate the new suite of indices.

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The new indices will provide a tool for assessing the performance of unique market segments, and will serve as benchmarks for small- and mid-cap-focused portfolios, the company said.

In addition to specialty indices that benchmark the performance of companies that have recently undergone IPOs and companies with high levels of share repurchases and short interest, Jefferies is providing broader market benchmarks for micro-cap, small-cap and mid-cap stock performance to facilitate relative performance comparisons across the Jefferies family of indices.

Jefferies also introduced a number of indices benchmarking emerging opportunities in the clean technologies and alternative energies sectors, such as the Jefferies Global Clean Technology Index – a composite index of nearly 50 leading small- and mid-cap companies engaged in clean technology worldwide, which includes companies engaged in solar and wind energy, and providers of biofuels, batteries, fuel cells, microturbines, enzymes and catalysts, and crops and seeds. In addition, targeted sub-indices will track companies focused on energy generation, energy storage and industrial biotechnology.

For the oil and gas, oil service and maritime shipping industries, Jefferies introduced a set of targeted energy indices, including:

  • Jefferies North American Small/Midcap E&P Index,

  • Jefferies Global Oil Service Index,

  • Jefferies Global Drilling Contractor Index, and

  • Jefferies US Tanker Index.

More information about Jefferies’ indices is at www.jefferies.com/indices.

Compliance January 1, 2007

Insurers Settle Up at Year-End

On the last day of 2006, two more financial services firms announced settlements with regulators about their insurance business practices.
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Insurance brokerage Arthur J. Gallagher & Co. said on Friday it will pay $36.9 million to settle a class-action lawsuit accusing it of accepting improper “contingent commissions” for steering business to particular insurers. On the same day MetLife Inc., the largest U.S. life insurer, said it agreed to pay $19 million to settle an investigation by New York State Attorney General Eliot Spitzer into fees paid to insurance brokers.
The Gallagher settlement includes payments of $28 million to current and former clients who used brokers to buy insurance from 1994 to 2005, as well as $8.85 million of legal fees. Gallagher did not admit wrongdoing, but said it settled the two-year-old lawsuit to avoid the costs and burdens of litigation. The complaint accused the firm of conspiring to steer business to insurers that paid hidden fees, rather than those offering the best coverage, Gallagher has said in regulatory filings. The settlement still requires approval by the U.S. District Court in New Jersey.
Spitzer’s Last?
The MetLife settlement, likely Spitzer’s last as attorney general (he took office as New York governor on January 1), involves the payment of $16.5 million to policyholders and $2.5 million of civil penalties.
The firm admitted no liability, but agreed to stop paying so-called “contingent commissions” to insurance brokers for life, disability and other group products, and to change other business practices. Spitzer and others have said such commissions amount to kickbacks, and result in brokers getting worse prices for companies seeking insurance (see Spitzer Takes On Contingent Commissions).

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