Insurance broker Marsh & McLennan Cos. Inc. will pay $400 million as part of a class action settlement filed five years ago by state pension plan administrators in New Jersey and Ohio in connection with a probe of the company’s acceptance of contingent commissions.
Marsh & McLennan admitted no wrongdoing or liability as part of the settlement, which has already received preliminary approval by a federal judge in New York.
The lead plaintiffs in the suit – 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 – alleged that Marsh & Mclennan broke federal securities laws by misrepresenting the nature of its contingent commission revenue.
The price of Marsh & McLennan stock dropped significantly when information was disclosed correcting the alleged misrepresentations and omissions, triggering a significant investment loss for plans overseen by those groups.
“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,” New Jersey Attorney General Anne Milgram said. “We also believe the settlement best serves the interests of class members.”
Ohio Attorney General Richard Cordray said “Marsh harmed the investments and retirement benefits of workers in Ohio and across the country. This massive fraud was built on unethical and illegal practices and violated the best interests of clients and shareholders alike. By serving as counsel to the lead plaintiff in the case, we were able to make sure that Marsh is held accountable and that workers, families and investors, including many in Ohio, are compensated for their losses.”
Marsh & McLennan said it expects about $205 million of the settlement will be covered by insurance, with the remainder to be paid with cash on hand.
“After more than five years of litigation, (the company) believes these settlements to be in the best interest of the company and its stockholders,” the company said in a release. “While the company continues to deny all of the claims in these lawsuits, the resolution of these matters puts the litigation arising from the events of 2004 largely behind us and reduces the company’s ongoing legal costs. (Marsh & McLennan) is focused on the future and further strengthening its world-class businesses.”
A final approval hearing is scheduled for December 23.
Separately, the company also announced that the ERISA class action lawsuit filed in 2004 in the U.S. District Court for the Southern District of New York has been settled for $35 million, $25 million of which will be covered by insurance.
Was this article valuable?
Here are more articles you may enjoy.