CME spurns NYSE, hooks up with Nasdaq

CME Group Inc. is moving to a sole listing with the Nasdaq OMX Group Inc., eliminating its listing on the New York Stock Exchange.

The Chicago-based parent company of the Chicago Mercantile Exchange and the Chicago Board of Trade, which has listed its shares on the NYSE since it went public in 2002, will cease listing on the NYSE on July 11, but will continue to use its “CME” ticker symbol.

Under the terms of the deal, Nasdaq OMX of New York will extend CME Group’s exclusive rights to offer futures and options on futures contracts based on Nasdaq indices by seven years, until 2019.

An evening of worldly wines and fashion

IN Practice appears on the web and in IN Daily every Monday. Comments and questions are welcome at IN Editor@InvestmentNews.

INPractice for July: Successful Events from Top Advisers

Week 1: An evening of worldly wines and fashion

Week 2: Gardening is golden (and nutritional)

Week 3: Retirement management simplified: health care options, rollover distribution reviews and assisted-living alternatives

Week 4: Spreading the cheer – a holiday charity event at a local children’s hospital

SEC nominees approved

The Senate Banking Committee today unanimously approved three nominees to be members of the Securities and Exchange Commission.

Elisse Walter, senior executive vice president for regulatory policy and programs for the Financial Industry Regulatory Authority Inc. of Washington and New York, Luis Aguilar, a partner with Atlanta law firm McKenna Long & Aldridge LLP, and Troy Paredes, professor of law and business at Washington University School of Law in St. Louis, were approved 10-0 by the committee.

Once again, new top guy at NFP Securities

NFP Securities Inc. yesterday promoted James L. Poer to be president of its broker-dealer.

This is the third head of NFP Securities so far this year. Mr. Poer replaced Daniel J. Young, who took over the firm at the end of February. Mr. Young replaced Jeff Montgomery.

The broker-dealer arm of National Financial Partners Corp. of New York, NFP Securities of Austin, Texas, is one of the largest independent-contractor broker-dealers in the industry and last year reported $1.01 billion in revenue.

SEC slams B-D with $950,000 fine

The Securities and Exchange Commission tagged Scottrade Inc. with a $950,000 fine today for fraudulent information it gave to clients regarding orders for Nasdaq -listed shares.

The SEC charged that St. Louis-based Scottrade made “fraudulent misrepresentations” to customers related “to the firm’s execution of their Nasdaq pre-open orders.”

Those orders are placed after the day’s market close, to be executed at the next market opening.

AMT bill unlikely to become law

Legislation that would save about 25 million taxpayers from paying the AMT this year was approved today by a vote of 233-189 in the House.

The legislation, which is not likely to pass the Senate, would provide relief from the alternative minimum tax for only one year, while permanently raising taxes on hedge fund managers.

Taxes would be increased by $31 billion over the next 10 years on hedge fund managers by increasing income taxes on them.

BofA to slash 7,500 jobs

Bank of America Corp. expects to slash about 7,500 jobs after shareholders approved its merger with Countrywide Financial Corp. yesterday.

The Charlotte, N.C.-based bank will lay off employees throughout the country, though final decisions on the specific groups and locations have not been made, the company said.

Most of the reductions, which are expected to result in “substantial” cost savings, will take place over the next two years. Employees will notified about their fate in the third quarter.

Eveillard expects more bad news

While many investors thought the equity market hit bottom in March, the impact of the credit crisis and Federal Reserve interest rate cuts are just beginning to be felt, Mr. Eveillard said.

“I think we are just beginning to see the negative economic consequences of the financial crisis, as well as the unintended consequences of the unusual steps taken by the Federal Reserve,” he said.

Honored by Morningstar in 2003 for having built one of the most successful long-term investment records in the industry, Mr. Eveillard is senior vice president and senior adviser for First Eagle Funds of Kansas City, Mo.

Morningstar strategists reveal their stock picks

The market may be down and volatile, but there are still opportunities for those seeking value across all sectors, including financials, a panel of senior equity analysts from Morningstar Inc. said Wednesday at the Chicago-based research firm’s annual conference.

“The question is whether there are individual banks or regional banks that could be looked at,” said Josh Peters, equity income strategist. “Are these banks going to get through this with an enhanced competitive position?”

To roll or not to roll

IN Retirement appears on the web and in IN Daily every Thursday. Comments are welcome at IN Editor@InvestmentNews.

Retirement plan rollovers are reshaping the business of financial advice.

In 2008 alone, $536 billion is expected to roll out of 401(k) plans into individual retirement accounts, according to Boston-based Cerulli Associates Inc.

Since moving money from a defined benefit or a defined contribution plan into an IRA is one of the biggest decisions an investor will make, advisers should consider all options. What's best? Let's start with the advantages of rolling over the funds into an IRA:

Bond insurers try to erase insurance

Following a series of downgrades from ratings agencies, bond insurers are in talks with banks, looking to wipe away some $125 billion of insurance on debt securities, the Financial Times reported today.

Insurers, including New York-based Financial Guaranty Insurance Co., Ambac Assurance Corp. of New York and MBIA Inc. of Armonk, N.Y., gave the banks insurance contracts in the form of credit default swaps. These swaps insured payments on collateralized debt obligations, which were normally backed by subprime mortgages.

SEC may let firms phase in IFRS

The all but certain transition to international accounting standards is sure to be a marquee event for public and private companies, according to Crain's Financial Week.

But it looks as if the Securities and Exchange Commission is leaning toward a soft open that would give U.S. companies the option of switching to the new standards before their use is required.

Although plans are not yet set in stone for the rule proposal expected later this summer, two SEC officials said last week that the agency is considering giving U.S. companies the option to switch to international financial reporting standards (IFRS) using a phased-in approach.

Ex-Bear hedge managers indicted for fraud

Federal prosecutors indicted two former hedge fund managers from soon-to-be defunct Bear Stearns today for misleading investors about the risks associated with two funds they managed.

The United States Attorney's Office for the Eastern District of New York in Brooklyn filed conspiracy, securities and wire fraud charges against the former hedge managers, Ralph R. Cioffi and Matthew Tannin, for misleading investors on the risk level of two funds that ultimately collapsed.

Home prices continue to tumble in April

Home prices continued their freefall in April, with some areas reporting declines of nearly 27% year-over-year.

The composite index of 10 metropolitan areas was down 16.3% in April from the same period a year ago, and the 20-city composite index also posted a record drop of 15.3% from 2007.

The largest losses in metropolitan areas on the year were in Las Vegas, which fell 26.8% and Miami, which tumbled 26.7%.

The only two metro areas reporting growth for the month of April were Charlotte, N.C., where prices grew 0.2%, and Dallas, which saw 1.1% growth in the same period.

Former UBS employee testifies against firm

A former UBS AG banker testified against his old company yesterday, claiming that the financial services giant’s private-banking unit participated in schemes to help wealthy U.S clients hide $20 billion in assets and avoid income tax laws, according to published reports.

UBS bankers aided wealthy American clients in creating fictitious trusts and corporations to conceal ownership of assets and helped them establish offshore accounts. They also advised clients to destroy financial records and helped investors file false tax returns, Bradley Birkenfeld said in testimony in U.S. District Court for the Southern District of Florida in Fort Lauderdale.

New York Life hires retail chief

New York Life Insurance Co. has tapped Jon Stenberg to join the company as a senior vice president in the individual-life department.

He will be responsible for overseeing the retail-insurance division of that department, which includes all retail-product development, systems and marketing to support life insurance sales through the company’s career agency system.

Mr. Stenberg will report to senior vice president Scott Berlin, who heads the department.

Gallagher buys consulting group

Arthur J. Gallagher & Co. of Itasca, Ill. today acquired The Lance Group LLC of Marlton, N.J., an employee-benefit consulting group.

The Lance Group, which specializes in school boards and municipalities and handles benefit plan analysis as well as design, will continue operating in its current location.

However, president and chief executive Scott Lance and his associates will operate under David Ziegler, eastern regional executive vice president of Gallagher’s employee-benefit consulting and brokerage operations.

Israeli action sends oil prices higher

Crude oil prices soared today on the news of an Israeli Air Force exercise that experts say was a show of force aimed at Iran.

The price of light sweet crude oil was up nearly 5% at $135.92 a barrel this morning on the New York Mercantile Exchange as prices jumped following the news that Israel had conducted a massive military exercise over the eastern Mediterranean Sea.

Pentagon officials confirmed that the exercise aimed at demonstrating Israel’s capability of destroying possible nuclear weapon development targets within Iran, the Associated Press reported. Israeli officials have declined to comment on the intended purpose of the exercise.

David Walker: Debt could 'sink our ship'

Growing government expenditures and increasing debt have put the U.S. on the brink of an economic crisis, said David Walker, former comptroller general of the United States and president of the newly established Peter G. Peterson Foundation in New York.

"I am very worried about the future of this country," said Mr. Walker, speaking at the UJA Federation of New York's Wall Street and Financial Services Division's Banking and Finance Dinner last night.

JPMorgan's Weatherstone dead at 77

Former JPMorgan Chase & Co. chairman and chief executive Sir Dennis Weatherstone, who helped turn the Wall Street firm into a U.S financial giant, has died of cancer at 77.

British-born Mr. Weatherstone started with New York-based JPMorgan in 1946, at age 16, when he worked as a bookkeeper in the firm’s London office.

He stayed at JPMorgan for 48 years and served as chairman and chief executive from 1990 to 1994. Under his leadership the firm became the largest U.S. bank by market capitalization.

Mutual funds report $75 billion of inflows

Investors put more than $75 billion into mutual funds in May, as stock, bond and money market funds reported positive inflows, according to data from Strategic Insight Mutual Fund Research and Consulting LLC of New York.

Equity fund net inflows were an estimated $17 billion in May, of which $13.3 billion went into international and global equity funds.

Nearly $16 billion was poured into bond funds in May. About $10.5 billion of the flows went into taxable bond funds, while $5.7 billion went into tax-free bond funds.

Rumors fly on possible Lehman sale

The chief executive of Lehman Brothers Holdings Inc. of New York may be considering selling the securities business of the company, according to CNBC.

The report claimed that Dick Fuld and other top executives at Lehman Brothers are concerned that unless business conditions improve dramatically, the firm either will need to reduce its work force significantly or sell the securities wing of its business. However, a conflicting report from Reuters citing “a person close to the company” claimed that there are no plans for a sale in the works at all.

Bellatore makes first asset acquisition

A new financial services firm focused on advisers, Bellatore Financial Inc. of San Jose, Calif., said this morning it had reached an agreement to make its first acquisition of advisory assets.

Bellatore said it will purchase $540 million in assets from Nationwide Investment Advisors LLC of Columbus, Ohio.

Terms of the deal were not disclosed.

Bellatore provides practice management support and a turnkey asset management program to advisers.

AIG's Sullivan shown the door after meeting

Martin J. Sullivan, chief executive of American International Group Inc., has been ousted from the New York-based insurer.

The embattled chief executive was tossed from the firm’s management and board of directors during a meeting on Sunday, according to published reports.

In Mr. Sullivan’s place, the board of directors appointed Chairman Robert B. Willumstad as the new chief executive, according to an announcement from AIG.

Amex approves NYSE Euronext merger

The membership group at the American Stock Exchange LLC today overwhelmingly approved the bourse’s merger with New York-based NYSE Euronext Inc., the parent company of the New York Stock Exchange.

Members of The Amex Membership Corp. voted 695 to 7 in favor of the merger, which is expected to close as early as August.

Under the terms of the deal, NYSE Euronext will pay $260 million in common stock for Amex.

Additionally, Amex members will be entitled to receive additional shares of NYSE Euronext common stock, based on the net proceeds from the sale of the Amex’s New York headquarters.

SEC eyes energy industry reporting

The Securities and Exchange Commission today outlined recommendations to modernize the reporting requirements of oil and gas companies — requirements that were last revised more than 25 years ago.

The new reporting requirements, outlined by the regulator’s division of corporation finance and office of the chief accountant, would instruct companies to utilize technological advances that have been formed in the last 25 years to report information.

Feds poised to charge ex-Bear managers

Federal prosecutors are prepared to file criminal charges of securities fraud against two former hedge fund managers at soon-to-be-defunct The Bear Stearns Cos. Inc., The Wall Street Journal reported today.

Indictments appear to be on the horizon against Ralph Cioffi and Matthew Tannin, who allegedly misled investors with a positive outlook on the two hedge funds they managed, which ultimately collapsed, according to the Journal story, which cited people familiar with the matter.

Write-downs wash away Wall Street profits

What a difference a year makes.

In the last 12 months, almost half the profits amassed in a three-and-a-half year stretch of unprecedented growth for Wall Street firms have evaporated, The New York Times reported.

From early 2004 to mid-2007, Wall Street giants earned a combined $254 billion in profits, but in the last 12 months those same financial services firms have written down the value of the assets they hold by $107.2 billion, decimating their earnings and share prices.

Foreclosure rates jump 7% in May

U.S. foreclosures jumped 7% in May, the third consecutive month of increases in foreclosure rates.

The data from RealtyTrac of Irvine, Calif., also showed a 48% increase in foreclosures year over year, the 29th consecutive month that has happened.

One in every 483 U.S. homes — or 261,255 properties — received a default notice, auction sale notice, or was repossessed by a bank, according to a statement released today by RealtyTrac, a real estate market data tracking firm.

401(k) disclosure bill mired, says congressman

Legislation requiring greater disclosure about 401(k) fees will not be moved through Congress this year, the chairman of the House Education and Labor Committee said yesterday.

“We’re not going to move it,” said Rep. George Miller, D.-Calif., according to Congress Daily AM. “We don’t see the president signing it.”

Referring to the year-end adjournment of Congress, he added: “With the amount of time left, it’s just too difficult to get anything through the Senate anyway.”

Franklin Templeton names execs

Franklin Resources Inc. of San Mateo, Calif., has named William Yun to the newly created position of executive vice president of alternatives strategies.

Vijay Advani was named executive vice president of global distribution.

Mr. Yun will oversee the firm’s specialized and alternative investment businesses, local asset management teams and joint ventures, such as those in Vietnam, China and Dubai.

In an expanded role, Mr. Advani will lead the firm’s retail and institutional distribution, including sales and marketing.

Franklin Templeton starts Int’l Growth Fund

Franklin Templeton Investments yesterday launched the Franklin International Growth Fund.

The fund’s objective is to seek long-term capital appreciation by investing primarily in mid- and large-cap companies outside the United States.

Coleen Barbeau and Par Rostom will serve as co-managers of the fund, which does not yet have a ticker sign.

Franklin Templeton Investments is a subsidiary of Franklin Resources Inc. of San Mateo, Calif.

Lehman ousts COO, demotes CFO

Lehman Brothers Holdings Inc. has made two key personnel changes in the executive suite.

The beleaguered New York-based company appointed Herbert “Bart” H. McDade III to succeed Joseph Gregory as president and chief operating officer. Mr. McDade has been the global head of the firm's equities division since June 2005.

"This has been one of the most difficult decisions either of us has ever had to make," said Richard S. Fuld Jr., Lehman Brothers' chairman and chief executive, in a statement.

SEC to address equity-indexed annuities

The Securities and Exchange Commission will consider a proposed rule to deal with equity-indexed annuities, SEC chairman Christopher Cox said today.

“Possibly as early as this month, we’ll consider a proposed rule to deal with the long-standing investor protection issue of equity-indexed annuities, and when they should be treated as securities,” Mr. Cox said at a Washington conference on “Next Generation Asset Management” sponsored by the Chartered Financial Analysts Institute of Charlottesville, Va.

Lehman gets boost from BlackRock

Despite record second-quarter losses at Lehman Brothers Holdings Inc., BlackRock Inc. purchased some Lehman Brothers shares in a secondary offering this week, according to news reports.

It was not disclosed how much BlackRock is investing in Lehman Brothers, both of which are based in New York, but BlackRock president Robert Kapito told Bloomberg he is confident Lehman Brothers can get past recent financial struggles stemming from the credit crunch.

Putnam names ex-Fidelity exec president

Putnam Investments of Boston announced today that Robert L. Reynolds, a veteran of Fidelity Investments, has been named president and chief executive officer.

Charles E. Haldeman, current president and chief executive, has been named chairman of Putnam Investment Management LLC.

Both appointments are effective July 1.

Mr. Reynolds had been at Fidelity Investments of Boston since 1984. From 2000 to 2007, he was vice chairman and chief operating officer.

Russell Investment CEO exits

Russell Investments’ president and chief executive officer, Craig Ueland, will leave the firm and his responsibilities will be temporarily filled by one of the Tacoma, Wash.-based firm’s board members, John Schlifske.

The decision for Mr. Ueland to leave was mutual, according to Russell spokeswoman Jennifer Tice.

“It was agreed that it was a good time for a leadership change,” Ms. Tice said.

Mr. Schlifske has spent the last 20 years at Russell’s parent company, Northwestern Mutual Life Insurance Co., serving most recently as CEO of Northwestern Mutual Investment Services, the company’s broker-dealer.

SEC moves to reform ratings industry

The SEC proposed yesterday to prohibit credit-rating agencies from issuing ratings on structured products unless information on the underlying assets is available.

The Securities and Exchange Commission voted to issue two proposals aimed at increasing transparency, accountability and competition in the credit-rating- agency industry in the wake of the subprime-mortgage crisis that has hobbled the economy over the past year.

$640,000 question: Can SandP beat hedge?

In a move to prove that investors are paying too much in fees for portfolio managers, investment mogul Warren Buffet has placed a bet with a New York hedge fund to see if carefully selected funds can beat the S&P 500, Fortune.com reported today.

The $640,000 bet, which was struck on Jan. 1, pits Mr. Buffet against Protégé Partners LLC and is based on the performance of five funds selected by the hedge fund manager.

The outcome of the wager rests on whether those funds will beat the S&P 500 over a 10-year period.

Legislators backs federal insurance regulator

A proposed Office of Insurance Information would just be the first step toward creating a federal insurance regulator, state insurance legislators said today at a congressional hearing.

The legislation “would establish a framework that a future Congress could build upon to create a federal insurance regulator, such as an [optional federal charter] or an office of national insurance,” said Rep. Brian Kennedy, D-R.I., president of the National Conference of Insurance Legislators of Troy, N.Y.

FHA forced to cover $4.6 billion in losses

The Federal Housing Authority was forced to dip into its $21 billion capital reserve fund to cover $4.6 billion in losses from its seller-financed mortgage down payment program.

“We had to book an additional $4.6 billion in unanticipated long-term losses, mostly due to the increased number of certain types of seller-funded loans in the FHA portfolio,” FHA commissioner Brian D. Montgomery said yesterday at the National Press Club in Washington. The Federal Housing Authority is a division of the Department of Housing and Urban Affairs.

BofA brings another Bear exec on board

Bank of America Corp. has named David H. Glaser, former co-head of investment banking at The Bear Stearns Cos. Inc., chairman of the its global mergers-and-acquisitions practice, according to The New York Times.

Mr. Glaser, who spent 23 years at New York-based Bear, was a confidant of Bear chief executive Alan Schwartz.

In recent weeks, Charlotte, N.C.-based Bank of America has tapped former Bear senior managing directors,

Shareholders demand accounting from AIG

A group of major shareholders at American International Group Inc. of New York have sent a chilly letter to the insurer’s board of directors, The Wall Street Journal reported.

The May 12 missive was sent by Eli Broad, former director of the firm; Shelby Davis, founder of Davis Selected Advisers LP of Tucson, Ariz., and Bill Miller, chairman and chief investment officer of Legg Mason Capital Management of Baltimore, the Journal said.

Founder tapped as PCAOB member

The Securities and Exchange Commission has tapped former Senate Banking Committee official Steven B. Harris to serve on the government agency’s Public Company Accounting Oversight Board.

Mr. Harris, who worked with the Senate Banking Committee from 1981 to 1987, was influential in the creation of the PCAOB, which was established through the Sarbanes-Oxley Act of 2002 to oversee the auditors of public companies.

He is senior vice president and special counsel for Washington-based Apco Worldwide Inc. and begins his new SEC post

AIG and Larch Lane delve into hedge funds

AIG Investments and Larch Lane Advisors LLC have paired to make seed investments in hedge funds.

The new joint venture expects to invest $50 million to $200 million per deal, covering a variety of hedge fund strategies and geographies.

New targets may include hedge fund startups, teams leaving established hedge funds and established hedge funds that need restructuring, according to an announcement.

AIG Investments comes into the new partnership with more than $10 billion in hedge fund assets under management and investments in more than 130 of these funds.

BlackRock to redeem selected ARPS

BlackRock Inc. will partially redeem auction rate preferred stock issued by many of its tax-free closed-end bond funds, the New York-based firm said.

Most of the redemptions are set for this month, with the remainder in July.

The fund company is redeeming ARPS issued by 56 of its 61 closed-end funds that use ARPS.

The redemptions total $1.6 billion worth of ARPS, or about 20% of the amount issued by its funds.

But the amount varies by fund, ranging from 2% to 42% of the ARPS outstanding for each, BlackRock said.

Fidelity lays off workers stateside, abroad

Fidelity Investments of Boston laid off an undisclosed number of workers this week, largely from its personal and workplace investing unit and human resource services unit.

The reduction in jobs resulted from the divisions’ restructuring efforts, said Anne Crowley, spokeswoman for the Boston-based fund firm.

“It was a very small percent of our overall work force,” Ms. Crowley said, noting Fidelity has some 46,000 employees. “These business units have been involved in restructuring since the fall.”

More companies at risk for debt rating cuts

The number of companies at risk of having their debt ratings cut reached a high last month due to a “material slowdown” in housing and consumer activity and tightening credit conditions, according to data from Standard & Poor's cited in The Wall Street Journal.

The number of entities at risk of a downgrade last month stood at 738, up 3.5% from April and 19% from May 2007, according to a report released today.

The number of companies at risk of being downgraded was 16% higher than in 2007, the report found.

SEC announces new enforcement deputies

The deputy director of enforcement for the Securities and Exchange Commission has retired, effective June 30.

Walter G. Ricciardi, who began his tenure in October 2005, oversaw litigation against Prudential Securities Group Inc. of New York, Jefferies & Co. Inc, also of New York, and Fidelity Investments Institutional Services Company Inc of Covington, Ky., among others. The suits resulted in settlements of more than $617 million.

Bear to spin off merchant banking unit

Bear Stearns Merchant Banking, the private-equity arm of The Bear Stearns Cos. Inc., will be spun off into an independent company, according to a report in The Wall Street Journal.

As part of the move, JPMorgan Chase & Co. of New York will become BSMB's largest investor, assuming roughly $1 billion of investments and commitments, according to people familiar with the situation.

“We're grateful to a lot of people at Bear Stearns for helping give birth to us,” said John Howard, BSMB's chief executive, according to the report.

Bernanke sees Fed rate holding steady

Federal Reserve Chairman Ben Bernanke has indicated that the weakness of the U.S. dollar on international currency exchange markets might contribute to rising inflation expectations.

In a speech given via satellite to the International Monetary Committee meeting in Barcelona, Spain, Mr. Bernanke noted that the Fed was “carefully monitoring” the falling dollar’s potential effect on the recent “rise in import prices and consumer price inflation.”

Milberg settlement said to be near

New York-based Milberg LLP is close to a settlement with federal prosecutors over a class action that alleges attorneys at the law firm paid kickbacks to clients, the Wall Street Journal reported today, citing two people familiar with the discussions.

Government officials allege that Milberg paid more than $11 million in kickbacks to clients in exchange for them serving as plaintiffs in securities class action suits.

Federal prosecutors and representatives for Milberg held discussions and made progress on the amount of money the firm will pay, the report said.

Former UBS banker to plead guilty

A former UBS banker is scheduled to plead guilty to charges of helping a wealthy U.S. client avoid taxes by hiding funds in Switzerland and Liechtenstein, according to published reports.

Bradley Birkenfeld, a former private-client banker at UBS AG of Zurich, Switzerland, from 2001 to 2006, has scheduled a “change-of-plea” hearing for June 9 in federal court in Fort Lauderdale, Fla., according to press reports.

He was indicted last month along with what authorities have been calling his co-conspirator, Mario Staggl, a trust specialist believed to be in Liechtenstein and considered a fugitive.

Vanguard adds manager to health care fund

The Vanguard Group Inc. has announced that Jean Hynes will be an associate portfolio manager on the Vanguard Health Care Fund (VGHCX).

She joins manager Ed Owens, who has led the fund since its inception in 1984.

The fund is subadvised by Wellington Management Co. of Boston.

Ms. Hynes has worked in investment management with Wellington since 1991.

She has done securities analysis for the Vanguard Health Care Fund since 1995 and managed investments portfolios since 1997.

CIT protests Moody’s downgrade

Financial services provider CIT is taking strong exception to a Moody’s downgrade that caused its share price to plunge more than 4%.

Moody’s Corp. of yesterday downgraded CIT Group Inc. to Baa1, from a rating of A3, claiming that the New York firm faced difficult market conditions and increased debt fallout from mortgage-backed securities from the credit crisis.

The ratings firm also faulted the liquidity in the firm’s portfolio.

Fixed-annuity sales up 35%

Estimated sales of fixed annuities were $18.1 billion in the first quarter, a 35% increase from the level a year earlier, according to Beacon Research Publications Inc.'s quarterly Fixed Annuity Premium Study.

Book value annuity sales for the quarter were an estimated $9 billion, representing a 74% increase, compared with the year-earlier period. Book value fixed annuities pay a declared rate of interest for a specified period.

Analyst cuts Lehman, Goldman, Morgan

Ahead of their second-quarter earnings reports in mid-June, Sanford C. Bernstein analyst Brad Hintz yesterday became the latest analyst to cut estimates on financial services firms that include Lehman Brothers Holdings Inc., Goldman Sachs Group Inc. and Morgan Stanley, according to Crain's New York Business.

With the companies’ second quarters wrapping up this week, Mr. Hintz lowered his second-quarter earnings forecast for Lehman to 15 cents per share from $1.38 per share, citing “hedging-related difficulties in fixed income.”

KBS launches REIT Fund II

KBS REIT, a private real estate investment trust based in Newport Beach, Calif., today launched an offering for its second fund, the KBS Real Estate Investment Fund II.

It will offer up to 200 million shares at $10, with the proceeds being used to acquire and operate commercial real estate and real estate-related assets in the United States, including office, industrial and retail properties.

The fund will close to investors in about two years and have a life of five to seven years.

When too much is not enough

IN Retirement appears on the web and in IN Daily every Thursday. Comments are welcome at IN Editor@InvestmentNews.

As baby boomers retire, advisers will be dealing with many clients who have insufficient assets to fund the lifestyle they expect.

Eventually, these clients will have to opt either for a reduction in lifestyle or the probability of imminently running out of money. If the stock market tumbles, the problem only grows worse — yet many of the asset-challenged boomers won't acknowledge their strained circumstances.

Bear Stearns shareholders approve sale

Shareholders of The Bear Stearns Cos. Inc. of New York today approved the purchase of the investment bank for about $10 a share, for a total of $2.2 billion, by JPMorgan Chase & Co. of New York.

The buyout vote was passed with 84% of shares voting in favor of the merger, which is now scheduled to close on May 30.

Each share of Bear Stearns common stock will be converted to 0.21753 shares of JPMorgan Chase common stock.