A class action lawsuit was filed on October 22, 2204 against Marsh & McLennan on behalf of all persons who, as of October 14, 2004, were participants in or beneficiaries of one or more of the retirement plans offered by Marsh, the law firm Lasky & Rifkind said in a press release on Monday.

The lawsuit, filed in U.S. District Court for the Southern District of New York, alleges that Marsh & McLennan and the fiduciaries of the Plans, breached their duties to Plaintiff and other Participants in the Plans, in violation of the Employee Retirement Income Security Act of 1974, with regard to the Plans’ holdings of Marsh stock.

Each of the Plans maintained significant holdings in Marsh stock and/or required Participants’ investments to be held, in whole or in part, in Marsh stock. For example, in the Company’s SIP, Participants’ investments were overwhelmingly limited to Company stock, all matching funds were in Company stock, and Participants were not permitted to meaningfully diversify their investments, Lasky & Rifkind asserts. Where Participants were permitted to diversify, they were substantially limited to investments in funds managed by Putnam Investments, a wholly owned subsidiary of Marsh, Lasky & Rifkind adds.

“In order to make customers believe that Marsh had received ‘bids’ from various insurance companies in attempt to get the lowest possible price and most favorable terms for the customer,” the plaintiffs claim “Marsh ‘rigged’ bids by asking certain insurance companies to bid higher than the company to which Marsh had already determined to steer the customer’s business. “Marsh’s alleged ‘bid rigging’ schemes were not only in direct conflict of interest with Marsh’s customers, but were fraudulent and illegal, and have opened the Company up to massive civil and criminal liability, lost future revenues, tarnished reputation, potential inability to borrow, and potential loss of customers,” Lasky & Rifkind said in a press release.

For these reasons, the plaintiffs claim the defendants knew or should have known that Marsh stock was an imprudent investment alternative for the Plans due to the improper business practices at Marsh and the overwhelming risk that the Plans assumed by holding Marsh stock in such large, concentrated amounts.

(via Business Wire)