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Who better to deal with a prosecutor than a former prosecutor? That’s long been the feeling at companies that have responded to state or federal probes by hiring former government lawyers. But the tactic has become especially popular within the insurance industry, which has been beset with numerous investigations in recent months. Last fall, New York State Attorney General Eliot Spitzer launched a still-expanding probe into the relationships between insurance broker Marsh & McLennan Cos. Inc. and several insurers, including The Hartford Financial Services Group Inc. and American International Group Inc. (AIG). Spitzer has been looking into allegations of bid-rigging and price-fixing, as well as claims that Marsh received payments from insurers for the business it directed toward them. The U.S. Department of Justice and the Securities and Exchange Commission are also conducting industry investigations. Since the probes started, Marsh, Hartford and AIG have each placed a former prosecutor in a new compliance post. In January, Marsh hired E. Scott Gilbert, a former assistant U.S. attorney in New York, to serve as chief compliance officer. (Three months earlier, the company tapped Michael Cherkasky, a veteran of the Manhattan district attorney’s office, as CEO.) Former prosecutors also took on compliance roles at two insurers in December. Hartford hired Ronald Apter as its new deputy associate counsel for compliance and AIG gave Associate General Counsel Mari Maloney the new title of chief compliance officer. Spree may end However, the in-house hiring spree may end with these moves. Legal recruiter June Eichbaum noted that many big insurers already had well-staffed compliance departments even before the subpoenas started flying, and didn’t really need to ramp up. A partner with Heidrick & Struggles International Inc., in New York, Eichbaum said that “the increasing visibility and importance of the compliance function has been ongoing” ever since the 2002 passage of the Sarbanes-Oxley Act and the accompanying spate of enforcement actions, as well as the the federal government’s revised sentencing guidelines, which went into effect late last year. The insurance industry’s recent hiring of prosecutors is “not necessarily in response to this latest crisis,” Eichbaum said. Neal Wolin, Hartford’s GC, agrees. “We are always trying to improve our compliance program. There is no specific link between our hiring of Ron Apter and any of the ongoing investigations.”

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