A federal judge last Monday tossed out a lawsuit filed again Marsh & McLennan in which shareholders accused the company of withholding information about improper trading at its Putnam Investments subsidiary in order to keep share prices artificially high, according to Dow Jones.
The class-action suit was filed on behalf of all those who bought Marsh securities between Jan. 3, 2000 and Nov. 3, 2003, and named Marsh & McLennan, Putnam, and several former officers and directors.
Seeking "unspecified damage and equitable relief," plaintiffs claimed that Marsh, the largest insurance broker in the world, did not share information about market timing at Putnam with investors until late 2003, long after the improprieties were discovered.
In January 2005, Marsh's brokerage subsidiary paid $850 million to settle bid-rigging allegations raised by New York State Attorney General Eliot Spitzer. Since the settlement, 10 former Marsh employees, not protected through the agreement, pleaded guilty to related criminal charges, according to Marsh's March 2 10-K filing.
Days before the judge's Feb. 27th ruling to dismiss the shareholder lawsuit, Marsh CEO Micheal Cherkasky announced that the company was on the lookout for potential acquisitions in order to bolster its Putnam fund unit. Since 2003, Putnam has sustained $143.4 billion in outflows and below-average poor performance, according to Bloomberg.
Cherkasky has said he intends to rebuild Putnam, not sell it.
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