Clark Inc., an employee compensation and benefits consultant, received a subpoena from New York Attorney General Eliot Spitzer's office on Friday in connection with the sale of its retirement products, according to the Chicago Tribune.
Spitzer is seeking information from the North Barrington, Ill.-based company on so-called contingent commissions, or money paid by a firm to bring in new business. Spitzer is investigating the role of these commissions, as he claims they create a conflict of interest for insurance brokers who have an incentive to steer business to companies that pay them the highest fees and not to companies that provide the best deal for clients.
Clark, which helps companies devise retirement plans for top executives, said it is fully cooperating with the inquiry. Many of Clark's plans are funded by insurance policies and about 80% of its revenue comes from commissions and related fees from the insurers who underwrite those policies.
In 2004, contingent commissions made up $11.3 million of Clark's $315.6 million total revenue, according to Clark vice president Jim Radosevich. He said the company, which has not been accused of any wrongdoing, does not intend to stop accepting these commissions.
After extracting settlement fines from the mutual fund industry, Spitzer has set his sights on the insurance industry, which he believes is rife with corruption. Last year, he subpoenaed Itasca-based broker Arthur J. Gallagher & Co. and Chicago-based CNA Financial Corp.
The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.