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MARSH SETTLES, AGREES TO PAY $850 MILLION NEW YORK — Insurance broker Marsh & McLennan Companies Inc. settled with government regulators Monday, agreeing to pay $850 million in restitution to clients in what authorities said was bid-rigging. The settlement comes after months of negotiations sparked by New York Attorney General Eliot Spitzer’s investigation into the insurance industry. A civil complaint filed by Spitzer on Oct. 14 accused the company of arranging sham bidding procedures that steered business to insurers based on kickbacks to Marsh, rather than procedures in the best interest of the clients buying the policies. So-called contingency agreements, under which insurers paid commissions to Marsh, lay at the heart of the matter. The filing started a chain reaction inside the company. Within weeks, Marsh abandoned the contingency arrangements despite protests by the insurance industry supporting their legitimacy, and its CEO and general counsel stepped down. They were replaced respectively by Michael Cherkasky, who spent 16 years in the criminal justice system, notably as head of the investigations division for the Manhattan district attorney’s office, and Peter Beshar, a securities lawyer from Gibson, Dunn & Crutcher. Marsh hired Davis Polk & Wardwell to conduct an internal investigation and to help negotiate a settlement. Led by partner Robert Fiske Jr., it involved 40 attorneys and investigators from Davis Polk and Kroll, a company related to Marsh. — New York Law Journal

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