Independent directors of Marsh & McLennan Cos. approached New York state Attorney General Eliot L. Spitzer this week about settling the corruption charges Spitzer has brought against the giant insurance broker and financial services firm, according to sources close to the investigation.
Marsh's stock rose yesterday as reports of the talks surfaced and jumped sharply later in the day as some news organizations reported that Jeffrey W. Greenberg was about to step down as chairman and chief executive, which Spitzer has indicated would be prerequisite to any settlement negotiations.
"The leadership of that company is not a leadership I will negotiate with," Spitzer said when he filed the complaint last week. "We were misled by the very highest levels of that company."
Marsh officials did not respond to a request for comment.
Also yesterday, the New York state insurance regulators said they had issued citations to the company, ordering representatives to appear before them Nov. 23. Insurance Superintendent Gregory V. Serio said in a prepared statement that Marsh officials will be asked to respond to charges that they used "fraudulent, coercive, dishonest practices and demonstrated untrustworthiness under New York state insurance law."
And New Jersey regulators announced that they, too, are investigating allegations of bid-rigging and other wrongdoing in insurance sales, Insurance Commissioner Holly C. Bakke said in a written statement.
Spitzer's charges, brought in a civil suit last week, involve allegations of bid-rigging, price-fixing and kickbacks. As an insurance broker, Marsh & McLennan subsidiary Marsh Inc. is supposed to solicit bids from insurers for its clients to help them get the best deal on coverage. The subsidiary allegedly rigged such bidding by arranging with some insurers to make artificially high bids so that a preferred insurer would win the business by appearing to be the low bidder.
A well-informed source, who spoke on condition that he not be identified because the discussions are ongoing, said that Spitzer has made his position clear to Marsh and its directors, and that the directors are mulling over a response.
Since Spitzer's charges were announced Oct. 14, Marsh & McLennan stock price has dropped more than 40 percent. The shares closed up nearly 8 percent yesterday -- at $26.79 -- after the reports of talks and Greenberg's possible departure.
Also yesterday, bond rating firm Moody's Investors Service cut its outlook for two other insurance brokerages, Aon Corp. and Willis Group Holdings Ltd., to negative. Both have been subpoenaed in Spitzer's investigation, and Moody's pointed to "uncertainties associated with" the probe. Aon said yesterday that it will no longer take the fees targeted by Spitzer's probe.
Staff writer Brooke A. Masters contributed to this report.