Monitoring Securities Lending Programs In Today’s Market Environment

The recent instability, and extreme volatility, experienced by the financial markets during these past few weeks has been of some concern to our clients who are fiduciaries and investment advisors of private employee benefit plans subject to the Employee Retirement Income Security Act of 1974 ("ERISA") — as well as to public employee benefit plans, foundations, mutual funds, insurance companies and other institutional owners of securities — which loan their securities. In just the past week alone, several unprecedented events have occurred in the U.S. and worldwide stock and fixed-income securities markets, which have had a severe adverse effect on a number of banks, insurers and other financial services institutions (and, of course, on the value of their securities). These developments, together with the continued extreme turbulence in equity and credit markets around the globe, should prompt plan fiduciaries, and financial services companies that either operate or