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Case Status:    SETTLED
On or around 01/28/2010 (Date of order of final judgment)

Filing Date: October 15, 2004

The complaint alleges that defendants violated the federal securities laws by issuing materially false and misleading statements and failing to disclose material facts regarding the Company's financial performance throughout the Class Period that had the effect of artificially inflating the market price of the Company's securities.

Specifically, the complaint alleges that during the class period Marsh failed to disclose that hundreds of millions of dollars of the Company's profits derive from illegal activities, namely "contingent commissions," special payments received from insurance companies that were far beyond normal sales commissions. As alleged, these payments were compensation for the business that Marsh and its independent brokers steered and allocated to the insurance companies, distinguished by Marsh as compensation for "market services." Additionally, the Complaint alleges that Marsh occasionally solicited bogus bids, in order to mislead its customers into believing that true competition had taken place. Marsh allegedly did this while it asserted in public statements that its "guiding principle" was to always regard its client's best interests.

The complaint also alleges that during the Class Period, statements made by the defendants were each materially false and misleading because they failed to disclose and misrepresented the following adverse facts: (a) the Company had implemented and executed an unsustainable business practice whereby the Company designed and executed a business plan under which insurance companies agreed to pay so-called "contingent commissions" in return for Marsh to steer them business and shield them from competition; (b) the defendants have described only that revenue attributable to MMC's risk and insurance business consists primarily of fees paid by clients, commissions and fees paid by insurance and reinsurance companies, interest income on funds held in a fiduciary capacity for others, and compensation for services provided in connection with the organization, structuring, and management of insurance. In particular, the defendants stated the revenue generated by MMC's risk and insurance business is fundamentally derived from the value of the service provided to clients and insurance markets. Although the defendants stated that commissions vary in amount depending upon the type of insurance or reinsurance coverage provided, the particular insurer or reinsurer, the capacity in which the broker acts, and negotiations with clients, the Company failed to disclose the kick-backs or the bid-rigging scheme; (c) the Company's illicit scheme exposed the Company to significant regulatory penalties and threatened loss of consumer goodwill jeopardizing the Company's ability to sustain any performance in its legitimate business practices; (d) the Company's revenues and earnings would have been significantly less had the Company not engaged in such unlawful practices.

According to a press release dated July 25, 2006, Judge Shirley Wohl Kram of the U.S. District Court for the Southern District of New York upheld a number of the plaintiffs' key claims against subsidiary Marsh Inc., its parent company Marsh & McLennan (NYSE:MMC), former chief executive officer Jeffrey W. Greenberg and former president and chief operating officer Roger Egan. Claims against certain independent directors and auditor Deloitte & Touche were dismissed because the plaintiffs failed to adequately plead their culpability in the alleged activities, the judge wrote. Kram said there was enough evidence that the broker and the two top executives were involved in manipulative or deceptive practices intended to mislead investors by artificially affecting market activity. The executives, she noted, had direct control over other employees who allegedly engaged in bid-rigging. The plaintiffs' claim that MMC submitted false and misleading statements in filings with the Securities and Exchange Commission also was upheld. The class-action suit against Marsh stems from a civil complaint that New York state Attorney General Eliot Spitzer filed against it alleging that the company "steered unsuspecting clients to insurers with whom it had lucrative payoff agreements." In January 2005, Marsh agreed to establish a fund of $850 million as part of a settlement with Spitzer and the New York State Insurance Department.

On October 13, 2006, a Second Amended Complaint was filed by the plaintiffs. A Third Amended Complaint was filed, and on May 14, 2007 defendants responded with a motion to dismiss the complaint.

According to the Decision of Interest dated November 21, 2007, on March 13, 2007, Plaintiff M.F. Henry ('Henry') filed a Third Amended Complaint (the 'TAC') alleging that corporate defendant Marsh & McLennan Companies, Inc. ('MMC' or the 'Company'), as well as various MMC directors (the 'Director Defendants') violated section 14 (a) of the Securities Exchange Act and Securities & Exchange Commission ('SEC') Rule 14a-9. The defendants have moved for dismissal pursuant to principles of res judicata, Rules 12 (b) (6) and 9 (b) of the Federal Rules of Civil Procedure, and the Private Securities Litigation Reform Act of 1995 ('PSLRA'). The Court grants the defendants' Rule 12(b)(6) motion and dismisses the TAC with prejudice.

On December 13, 2007, a Notice of Appeal was filed as to the Memorandum and Opinion dismissing the Third Amended Complaint with prejudice. On March 19, 2008, the appeal was dismissed with prejudice. On September 29, 2008, the plaintiffs filed a motion to certify the class. On November 13, 2009, the parties filed a Stipulation and Agreement of Settlement.

According to an article dated November 13, 2009, Marsh & McLennan Cos. Inc. will pay $435 million to settle securities and ERISA class actions filed against the brokerage in 2004, New York-based MMC said. The suits were filed against MMC after its stock plummeted from $45 to about $23 after former New York Attorney General Eliot Spitzer filed charges against MMC alleging bid-rigging and client-steering at its brokerage unit. MMC settled those charges in 2005 for $850 million. The latest settlements, which are subject to court approval, resolve all claims against MMC, Marsh Inc. and named individuals resulting from the securities and Employee Retirement Income Security Act suits, according to an MMC statement. Under the terms of one settlement, MMC will pay $400 million to settle the securities class action suit brought by Ohio and New Jersey on behalf of public pension plans in those states. $205 million of the settlement will be covered by insurance, MMC said. Separately, MMC will pay $35 million to settle an ERISA class action brought by participants and beneficiaries of an MMC retirement plan. $25 million of that amount will be covered by insurance, MMC said. In a statement, MMC ... admitted no wrongdoing.

On December 7, 2009, Judge Colleen McMahon preliminarily approved the settlement. A Settlement Fairness Hearing was set for December 23, 2009, to determine if the final settlement should be approved. On December 23, 2009, Judge Colleen McMahon signed the Decision and Order approving the settlement, certifying the class for settlement purposes, approving the plan of allocation of the settlement fund, awarding attorneys' fees, and rejecting the objections. According to the Order, the Court (1) approves the Settlement; (2) grants Lead Counsel's Fee Application of 13.5% of the Settlement Fund; (3) grants Lead Counsel's request for reimbursement of expenses in the amount of $7,848,411.84; and (4) grants Lead Plaintiff's' PSLRA Award Request for expenses totaling $214,657.14 ($70,000 for the Ohio Plaintiff's and $144,657.14 for the New Jersey Plaintiffs). The Final Judgment was entered that same day and the case was dismissed with prejudice. On January 28, 2010, a Corrected Final Approval Order and Judgment was entered.


Sector: Financial
Industry: Insurance (Miscellaneous)
Headquarters: United States


Ticker Symbol: MMC
Company Market: New York SE
Market Status: Public (Listed)

About the Company & Securities Data

"Company" information provides the industry and sector classification and headquarters state for the primary company-defendant in the litigation. In general, "Securities" information provides the ticker symbol, market, and market status for the underlying securities at issue in the litigation.

In most cases, the primary company-defendant actually issued the securities that are the subject of the litigation, and the securities information and company information relate to the same entity. In a small subset of cases, however, the primary company-defendant is not the issuer (for example, cases against third party brokers/dealers), and the securities information and company information do not relate to the same entity.
COURT: S.D. New York
DOCKET #: 04-CV-8144
JUDGE: Hon. Shirley Wohl Kram
DATE FILED: 10/15/2004
CLASS PERIOD END: 10/14/2004
  1. Wolf Haldenstein Adler Freeman & Herz LLP (New York)
No Document Title Filing Date
COURT: S.D. New York
DOCKET #: 04-CV-8144
JUDGE: Hon. Shirley Wohl Kram
DATE FILED: 03/13/2007
CLASS PERIOD END: 10/13/2004
  1. Bernstein Liebhard & Lifshitz, LLP (New York)
  2. Grant & Eisenhofer (New York)
  3. Grant & Eisenhofer (Wilmington)
No Document Title Filing Date
No Document Title Filing Date
No Document Title Filing Date