(November 19, 2009) – After five years, insurance broker Marsh & McLennan has settled a contingent commission class-action lawsuit led by three state pension funds.
The $400 million settlement terminates the suit—led by the New Jersey Division of Investment, Public Employees Retirement System of Ohio, State Teachers Retirement System of Ohio, and the Ohio Bureau of Workers’ Compensation—which had claimed that the insurance giant broke securities laws relating to the misrepresentation of revenues based on contingent commissions.
Uncovered by then-New York Attorney General Eliot Spitzer, the contingent commission issue revolved around payments made to brokers by the insurance company based on profitability and volume of business. Spitzer alleged that bid-rigging was occurring, and customers were being steered toward certain insurers, such as Marsh & McLennan, due to fake bids; subsequently, a civil suit was filed against the company, which settled for $850 million.
“This is a substantial agreement that settles the claims we raised against Marsh in our suit to recover investment funds lost by our pension fund,” said New Jersey Attorney General Anne Milgram, according to Reuters. “We also believe the settlement best serves the interests of class members.”
The insurance company has admitted no liabilities or fault.
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