Tuesday, November 2, 2004

Marsh & McLennan Complaint

In response to a comment posted by Leigh Bienen regarding the specific statutes for Eliot Spitzer's action against Marsh & McLennan, here is a link to the complaint. The specific provisions of New York law are Executive Law §63(12) for fraud and the Donnelly Act (Gen. Bus. Law §340 et seq.) for antitrust. The Donelly Act was passed a few years after the Sherman Anti-Trust Act, and has an even greater pedigree than the Martin Act, which was used against the mutual funds and stock analysts. There are also causes of action for securities fraud (Gen. Bus Law §352-c), unjust enrichment, and common law fraud (i.e. the kitchen sink).

On October 25, after Marsh & McLennan CEO Jeffrey Greenberg resigned, Mr. Spitzer issued the following press release:

The actions announced today by the Board of Directors of Marsh & McLennan Companies permits Marsh and this office to move forward toward a civil resolution of our lawsuit.

We are persuaded that the goals that would have been advanced by a criminal prosecution of the corporation - punishment, restitution, general deterrence, and industry reform - will be better accomplished by criminal prosecution of individuals, adoption by the company of dramatically new business procedures, installation of new leadership, a full examination of prior wrongdoing and a pledge of restitution to those harmed.

Realizing these goals, while also allowing Marsh & McLennan to retain a viable role in the marketplace, makes corporate criminal prosecution unnecessary.

No word (yet) on criminal charges against individuals from Marsh & McLennan (aside from a couple lower level employees who plead guilty to state charges), nor any indication (yet) that the U.S. Attorney's Office has started an investigation, but don't be surprised to see the S.D.N.Y. U.S. Attorney in the vicinity. (ph)

http://lawprofessors.typepad.com/whitecollarcrime_blog/2004/11/marsh_mclennan_.html

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