The original complaint charges Aon Corporation and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Aon, through its various subsidiaries worldwide, serves its clients through three operating segments: Risk and Insurance Brokerage Services, Consulting and Insurance Underwriting.
Specifically, the complaint alleges that Aon and its top officers violated the federal securities laws by disseminating false and misleading statements concerning the Company's results and operations. The true facts, which were known by each of the defendants but concealed from the investing public during the Class Period, were as follows: (a) that the Company was receiving illegal and concealed "contingent commissions" pursuant to illegal "contingent commission agreements"; (b) that by concealing these "contingent commissions" and such "contingent commission agreements," the defendants violated applicable principles of fiduciary law, subjecting the Company to enormous fines and penalties totaling potentially tens -- if not hundreds -- of millions of dollars; and (c) that as a result, Company's prior reported revenue and income was grossly overstated.
The complaint further alleges that on October 14, 2004, New York Attorney General Eliot Spitzer announced he had charged several of the nation's largest insurance companies and the largest broker with bid rigging and pay-offs that he claimed violated fraud and competition laws. Upon revelation of these illegal acts, the Company's shares fell to $23.03, a loss of 16%. Then on October 19, 2004, The Wall Street Journal published an article on Spitzer's investigation of Aon, which stated that the reinsurance business, or insurance policies for insurance companies, was the focus of the probe, because Spitzer suspected Aon's insurance-buying clients may not have received the best deal. On these revelations, the Company's shares fell again, from $21.20 to $19.20, a drop of 9%.
On March 24, 2005, Judge Charles R. Norgle Sr. granted the motion to consolidate the actions and further granted the motion to appoint the the Local 408 Group as lead plaintiff and approved lead plaintiff’s selection of Lerach Coughlin as Lead Counsel, and Lasky as Liaison Counsel. On May 26, 2005, the lead plaintiff filed a Consolidated Complaint, and on August 1, 2005, the defendants filed a motion to dismiss the Consolidated Complaint. On February 2 and March 2, 2006, Judge Norgle issued the Opinion and Amended Opinion and Order, respectively, denying the defendants’ motion to dismiss. On May 12, 2006, the plaintiff filed a motion to certify the class, which was granted on November 8, 2006.
On August 3, 2007, the defendants filed a motion for reconsideration of the Court's denial of defendants' motion to dismiss the consolidated amended complaint in light of new controlling authority, which was denied by the Memorandum Opinion and Order issued on March 5, 2008. The case is currently in the discovery phrase. Jury trial is set for November 2009.
On August 21, 2009, the plaintiffs filed a Motion for Preliminary Approval of Class Action Settlement. That same day, a Stipulation of Settlement was filed. The settlement is in the amount of $30 million in cash. On August 24, 2009, the Honorable Charles R. Norgle, Sr., signed the Order Preliminarily Approving Settlement. The Settlement Hearing is set for November 17, 2009. On September 9, 2009, Judge Norgle issued a revised order preliminarily approving the settlement. On November 24, 2009, the Court entered the Orders approving the plan of allocation, awarding attorneys' fees and expenses and approving the final settlement. The action is dismissed with prejudice.