MMC Settles Stock-Drop Case
Lawyers for participants in Marsh & McLennan Co.'s (MMC) Stock Investment Plan have hammered out a $35-million settlement with the company of allegations it violated the Employee Retirement Income Security Act (ERISA) by continuing to offer company stock as a retirement investment when it was no longer prudent.
U.S. District Judge Colleen McMahon of the U.S. District Court for the Southern District of New York has given preliminary approval to the deal and has scheduled a hearing for January 29 to consider a final decision on the settlement of the class-action suit, according to court documents. Class members were participants or beneficiaries of the Marsh & McLennan Companies, Inc. Stock Investment Plan between July 1, 2000, and January 31, 2005.
The settlement comes in a consolidated case covering a series of participant lawsuits alleging that company officials knew or should have known that the company was engaging in bid rigging and price fixing that artificially inflated the value of its stock. In January 2005, the company agreed to set up a $850-million fund to compensate its clients.
In seeking McMahon’s blessing, lawyers pointed out that the settlement avoids the necessity of litigating a complex financial case.
“The facts and circumstance surrounding the fraudulent business practices at the world’s largest insurance broker, underlying the breach of duty claims in the Complaint, are highly complex and undeniably would be greatly time consuming to litigate further to trial,” the lawyers argued, according to the summary of the settlement. “This Settlement conserves judicial resources and reduces the expense associated with the remaining expert discovery and briefing required to prepare Plaintiffs’ case against Defendants for trial.”