In recent months, CDS spreads for financial institutions, including those for U.S. banks, have widened. Whether one believes that the CDS spreads have widened principally due to concerns about the sovereign crisis in Europe, or as a result of the continuing saga of mortgage related litigation in the United States, it is important that issuers and distributors of structured products monitor these developments. In a recent FINRA consent order (discussed in a prior issue http://www.mofo.com/files/Uploads/Images/110825-Structured-Thoughts.pdf), FINRA noted that the broker-dealer should have been monitoring CDS spreads for the issuers of the structured products in question. CDS spreads are but one reflection of perceptions regarding credit risk. In drafting offering disclosure or in reviewing offering disclosure regarding structured product issuances, careful attention should be paid to the discussion of the issuer’s business condition, credit quality and any risks related to these circumstances. In rapidly evolving markets, disclosure may need to be updated with some frequency. Dealers and distributors will also want to bear in mind that investors may have questions concerning issuer credit risk, and that they should ensure their customers are aware of the role that changing credit risk plays in assessing the riskiness of a particular investment.