The Markets January 6, 2009

S&P Sees December as Glimmer of Hope in Otherwise Bad Year

Global equity markets rebounded in December, according to Standard&Poor’s Index Services monthly global stock market review, “World by Numbers.″
Reported by

An S&P press release said 19 of the 21 emerging markets and 22 of the 25 developed markets posted gains during December; however, the 46 global equity markets that comprise the S&P Global Broad Market Indices lost a combined $17 trillion for the year. Emerging markets fell 54.72% and developed markets dropped 42.72% in 2008, according to S&P data.

“A glimmer of hope—that is how we can define December,” said Howard Silverblatt, senior index analyst at Standard & Poor’s and author of the report, in the press release. “As central banks race to reduce rates, add liquidity and shore up their local economy, markets remain cautiously optimistic as we move into 2009.”

Want the latest retirement plan adviser news and insights? Sign up for PLANADVISER newsletters.

Emerging market decliners in 2008 included Brazil (-57.35%), Russia (-73.67%), India (-64.51%), and China (-53.21%). Morocco was the best performer among emerging market countries, declining by 15.85%, followed by Israel, with a loss of 34.68%.

Among developed markets, Ireland (-69.94%), Greece (-66.50%), and Norway (-66.07%) were the major decliners in 2008. Japan posted the second best return during the year (-29.22%), followed by Switzerland at -30.60%. The United States came in as third best, declining 38.68%.

By sector, both Financials and Materials lost over half their value (-53.77% and -52.90%, respectively) during the year. Telecommunications, Utilities, and Consumer Staples declined 10.39%, 11.45%, and 13.84%, respectively.

The complete World by Numbers report can be accessed at www.standardandpoors.com/indices under “Publications.”

Compliance January 6, 2009

New Company Stock Suit Filed against Boston Scientific

A former employee of Boston Scientific Corp., who dropped out of a previous lawsuit before it was dismissed, has filed a new lawsuit alleging the company breached its fiduciary duties by offering company stock as a retirement plan investment option.
Reported by

Former employee Robert Hochstadtvwas originally a lead plaintiff in the previous suit along with Douglas Fletcher and Michael Lowe, but he dropped out of the suit before a review by U.S. District Judge Joseph Tauro of the U.S. District Court for the District of Massachusetts. In dismissing the previous case, Tauro ruled that because Fletcher and Lowe sold more stock than they purchased during the time period when they claimed the company’s stock price was artificially inflated, they likely were not financially injured by any potential misdeed by the employer and therefore, lacked constitutional standing (see “Boston Scientific Wins Stock Drop Lawsuit’).

Hochstadt was joined in the new suit by Edward Hazelrig, Jr., in filing the suit on behalf of themselves, the plan, and similarly situated plan participants and beneficiaries. Like the previous case, the new suit claims plan fiduciaries breached their duties under the Employee Retirement Income Security Act (ERISA) by continuing to offer company stock as an investment option from the period May 7, 2004, to January 26, 2006, when the former employees claim the stock price was artificially inflated in light of company problems. The stock price went from a high of $45 per share during the class period to $20 per share at the end of the class period, the complaint said.

Never miss a story — sign up for PLANADVISER newsletters to keep up on the latest retirement plan adviser news.

According to the complaint the corporate problems that should have caused the defendants to know the stock price was artificially inflated included:

  • information emerged publicly during 2004 to 2006 about safety concerns over Boston Scientific’s stent products;
  • a recall of stents in 1998;
  • a Department of Justice investigation into the stent recall;
  • widespread problems in Boston Scientific’s manufacturing facilities.
  • The suit seeks, among other things, restitution for the plan and affected participants.

«