TRENTON
– Marsh & McLennan Companies Inc.
has tentatively settled a class action lawsuit
filed by state pension funds in New Jersey
and Ohio for $400 million. The original complaint
had charged the insurance company with making
false and misleading statements to investors
related to contingent commissions from insurers.
Marsh
& McLennan admitted no wrongdoing or liability
in settling the suit, which had originally
been filed in October 2004 in U.S. District
Court in the Southern District of New York
on behalf of shareholders who held stock in
the company between October 14, 1999 and October
13, 2004. The lead plaintiffs in the legal
action were the New Jersey Division of Investment
in the Department of Treasury, the Public
Employees Retirement System of Ohio, the State
Teachers Retirement System of Ohio and the
Ohio Bureau of Workers’ Compensation.
The
settlement, which was mediated by retired
Judge Daniel Weinstein, received preliminary
approval on Tuesday from U.S. District Court
Judge Colleen McMahon. A final approval hearing
is scheduled for December 23. Members of the
class will have until December 14 to opt out
of the settlement. New Jersey’s share
of the settlement is yet to be determined
because the amount of recovery depends on
when shares were purchased or sold and because
the exact number of claims to be filed is
not yet known. The estimated average recovery
is 77 cents per share. Subject to court approval,
New Jersey and Ohio will also each receive
expenses as lead co-plaintiffs in connection
with the filing.
"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," Attorney General Milgram said.
"We also believe the settlement best
serves the interests of class members."
"This
settlement marks another successful outcome
of joint efforts by the Attorney General's
Office and the Division of Investment to safeguard
the interests of taxpayers and pension fund
members and beneficiaries,” said Treasurer
David Rousseau.
The
class action lawsuit charged that Marsh &
McLennan made false and misleading statements
in its public filing and other public communications
in connection with an insurance brokerage
industry practice of brokers charging and
collecting “contingent commissions”
from insurers.
The
plaintiffs alleged that Marsh & McLennan
violated federal securities laws by misrepresenting
the nature of its contingent commission revenue
and the price of Marsh & McLennan stock
dropped significantly when information was
disclosed correcting the alleged misrepresentations
and omissions.
Marsh & McLennan denied that it made any
false or misleading statements or otherwise
violated federal securities laws, denied liability
and denied that plaintiffs were damaged.
The
case was supervised for New Jersey by Assistant
Attorney General Carol Jacobson and Deputy
Attorney General Samuel Cornish. Lead counsels
in the class action suit are Bernstein Liebhard
and Grant & Eisenhofer, two New York law
firms.
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