Marsh & McLennan’s
Sightings from The Catbird Seat
~ o ~
February 1, 2007
Marsh & McLennan to sell
Putnam for $3.9 billion
NEW YORK (Reuters) - Insurance broker Marsh & McLennan Companies Inc. (NYSE:
MMC - news) said on Thursday that it would sell its troubled money manager, Putnam
Investments, to a unit of Canada's Power Financial Corp. (Toronto: PWF.TO - news).
for $3.9 billion.
The sale price was in line with recent press reports, but toward the lower end of initial
estimates of how much the scandal-ridden asset manager would fetch when Marsh &
McLennan said in September that it was considering a sale.
Montreal-based Power Financial, which controls insurer Great-West Lifeco Inc.
(Toronto: GWO.TO - news) and IGM Financial Inc. (Toronto: IGM.TO - news),
Canada's largest mutual fund company, had said last month that it was in talks to
Analysts have said Power Financial would gain a key foothold in the U.S. money
management business. For Marsh, the sale followed longtime pressure from investors to
shed the underperforming unit.
Putnam has suffered from rising redemptions and poor performance by its top funds,
that raised doubts among some analysts whether a deal would go through at all.
Both boards have approved the transaction, and they expect it to close in the middle of
Putnam is one of Marsh & McLennan's four major divisions. The others are the Marsh
insurance brokerage unit, risk consulting unit Kroll Inc. and Mercer, which handles
human resources and provides financial services to companies.
Putnam's Boston neighbor, MFS Investment Management, was also put up for sale in
September but its Canadian parent, Sun Life Financial Inc. (Toronto: SLF.TO - news),
said just a month later that it had decided not to sell the unit after a strategic review.
Boston-based Financial Research Corp (FRC) said that Putnam again saw the heaviest
redemptions in long-term stock and bond mutual funds, losing $1 billion in
November. It lost $13.8 billion in assets in 2006 till end-November, FRC said.
Power Financial said its Great-West Lifeco Inc. unit would own the asset manager.
January 3, 2006
SEC charges 6 ex-Putnam officers
Officers alleged to have partaken in a $4M fraud scheme;
company will not face SEC action.
WASHINGTON (Reuters) - Six former officers of Putnam Fiduciary Trust, a unit of
mutual funds group Putnam Investments, have been charged by regulators over an
alleged $4 million fraud scheme and attempted cover-up beginning in 2001, officials
But the Securities and Exchange Commission said it would not bring an enforcement
action against the company itself "because of its swift, extensive and extraordinary
cooperation in the commission's investigation."
Putnam Fiduciary is a Boston-based transfer agent owned by Putnam Investments,
the mutual funds family controlled by financial group Marsh & McLennan.
The SEC charges versus the ex-officers come as Putnam Investments, the nation's
tenth-largest mutual fund family, is recovering from trading scandals beginning in fall
2003 that hurt it and others in the $8.8 trillion mutual fund industry.
Putnam Investments Chief Executive Ed Haldeman said that when the problem at
Putnam Fiduciary came to light in 2004, the parent company quickly reported it to
regulators, auditors and trustees; repaid harmed clients roughly $4 million; terminated
employees involved and disclosed the problem to clients.
In addition, he said in a statement, Putnam investigated on its own and made internal
The SEC alleged in U.S. District Court in Boston that Putnam Fiduciary in January 2001
was a day late in investing certain assets of health care services and products group
Cardinal Health Inc., which was at the time a defined- contribution plan client of the
The delay cost Cardinal's defined-contribution plan to miss out on nearly $4 million in
market gains, the SEC said.
"Rather than inform Cardinal Health of the one-day delay or compensate their client for
the missed trading gain, the defendants decided to improperly shift approximately $3
million of the costs of the delay to shareholders of certain Putnam mutual funds through
deception, illegal trade reversals, and accounting machinations," the SEC alleged in
The SEC said it charged the following former Putnam Fiduciary employees: operations
chief Karnig Durgarian, global operations services head Donald McCracken, defined
contribution servicing director Virginia Papa, managing directors Sandra Childs and
Kevin Crain, and vice-president Ronald Hogan.
The SEC also charged that the defendants improperly allowed Cardinal's plan to bear
about $1 million of the loss without disclosing this to Cardinal, and that Durgarian, Papa,
Childs, and Crain tried to cover up the wrongful conduct.
"Ms. Papa has not misled any client, manipulated any record, or covered up anything.
She looks forward to vindication in court," said Michael Connolly, Papa's attorney.
Gary Matsko, McCracken's attorney, said his client has cooperated fully with the SEC.
"He intends to defend the charges. He maintains he hasn't done anything wrong," he
Anthony Mirenda, Crain's attorney, said his client "will fight this to clear his name
because he did not participate in any fraud." Mirenda said Crain drew the attention of
internal auditors to the problem and cooperated with authorities.
Attorneys for Durgarian and Hogan could not be reached for comment. John Sten,
attorney for Childs, declined to comment.
In not charging Putnam Fiduciary, the SEC said it took into account the company's
prompt self-reporting, its internal probe and other steps like those outlined in the
precedent-setting 2001 Seaboard case. That decision set standards for how to
cooperate with the SEC and held out the possibility of leniency for companies that meet
In the Putnam Fiduciary case, "the commission has sent a strong signal that should
make it easier for a company to decide whether to self-report misconduct," said SEC
Deputy Enforcement Director Walter Ricciardi in an interview.
November 8, 2004
Pensions seek consultant disclosure
By Yamil Berard, Star-Telegram Staff Writer
Jack Silver was a teacher at an inner-city Chicago school hobnobbing with the
managers of multibillion-dollar funds.
In fact, investment managers were paying $50,000 to "meet people like me," said Silver.
"Now, that's a hell of a lot of money."
Why Silver? Because he was on the pension board for teachers in Chicago. Its
consultant put on the seminars, raking in the admission fee from managers who might
be seeking a piece of the fund's $10 billion investment pie.
That made Silver wonder: Did attending the seminars help managers win the
consultant's recommendation? And was the consultant doing other business with
managers It hyped to the pension board?
Those are questions that some public pension officials have begun asking since a
handful of pension funds around the country have made discoveries that left them
They found that the consultant who guided their every move -- telling them how to divvy
up investment dollars which investment managers to hire and fire, and whether the fund
was getting socked with excessive trading charges'-- was making money from both sides
of the table.
Now there's a growing clamor for public pension plans to demand that consultants put
their cards on the table and disclose financial incentives. Some Texas plans have taken
steps to require disclosure, the Star-Telegram found in a survey of more than a dozen
But others still have not, despite what some critics see as the potential for conflicts of
interest. Their concerns:
• Some consultants recommend investment managers that are a branch of their own
company. In California, a Santa Clara Valley pension board fired investment manager
Putnam in February after the indictment of two people for securities fraud. Putnam and
the plan's consultant, Mercer Investment Consulting, are both part of Marsh &
McLennan Cos. The New York attorney general's office is examining whether
Marsh rigged insurance bids, and whether Mercer steered clients to Marsh
Continued at... “The Great Nest Egg Robberies”
December 08, 2003
Pension Funds File Shareholder
Proposal to Change Marsh &
Multi-Billion Dollar Putnam Scandal
and Weak Oversight To Blame
WASHINGTON — Four of the nation's most powerful public pension funds, in a
heightened response to the Putnam mutual fund scandal, announced they are using an
anticipated Securities and Exchange Commission (SEC) rule to more easily nominate
and elect better leadership on Putnam's parent company board.
The response comes in the form of a shareholder proposal that seeks access to the
proxy to nominate and elect directors not hand-picked by the company. Marsh &
McLennan Companies Inc. (NYSE: MMC), which is the parent company of Putnam
Mutual Funds, is the target of the resolution for its failure to properly control its money
management business and for its severe lack of independent board leadership.
Filing the action are AFSCME Employees Pension Plan, New York State Common
Retirement Fund, California Public Employees' Retirement System and the
California State Teachers' Retirement System. Together they hold 6.85 million
shares, worth $306,000,000 or about 1.3 percent of the company.
"Marsh & McLennan deserves to be the first company in U.S. history to face a binding
proxy access proposal because of its gross failure to have proper controls that could
have prevented the Putnam disaster," said Gerald W. McEntee, AFSCME Employees
Pension Plan Chairman. "It is tragic that the board at Marsh & McLennan lacked the
independence needed, and today continues to be influenced more by its insiders
than the needs of its shareholders. There is no question that shareholders will support
the idea of electing a truly independent director to the board if given the opportunity
through our shareholder resolution."
"Investors have pulled more than $32 billion dollars in assets out of Marsh's Putnam
subsidiary due to its involvement in this terrible mutual fund scandal, and Marsh's stock
price is down about 10 percent," added Alan G. Hevesi, New York State Comptroller
and sole trustee of the New York State Common Retirement Fund. "I can't think of a
stronger case worthy of shareholder involvement, and I have no doubt, that given the
chance, shareholders will respond favorably to our initiative."
The problems of Putnam and Marsh & McLennan have been continuously mounting
since the trade scandal broke several months ago, said Sean Harrigan, President of
CalPERS. "Shareholders do not have any interest in using the proxy statement process
to nominate a director unless the problems are so severe they are Enron-esque.
Putnam and Marsh & McLennan's problems are in that category," he said.
Lack of independence and excessive compensation are also reasons for filing the
proposal, he said. "The excessive compensation received by and promised to Lawrence
Lasser is outrageous," he added. Lasser was fired as Putnam's CEO and pushed off
the Marsh & McLennan board, but may collect an estimated $89 million in severance,
in addition to having received salary, bonuses, stock options, restricted shares and
retirement pay packages worth $163 million over the last five years. "This tells all of
us that this board is more concerned about its friends than its owners," he said.
Jack Ehnes, Chief Executive Officer of CalSTRS said the sponsors are also concerned
about the lack of independent board membership. "This board isn't meeting the needs of
shareholders. Now it is time for shareholders to do more than send a message of our
dissatisfaction. We must be allowed to use the same process that the company does to
elect truly independent directors, who will listen to the shareholders--the real owners of
The resolution will appear on the proxy if the SEC approves the final regulations
regarding shareholder access to the proxy next month. The SEC allows early filing of
shareholder resolutions regarding proxy access in anticipation of the regulations'
American Federation of State, County
and Municipal Employees, AFL-CIO
1625 L Street, N.W. Washington, D.C. 20036-5687
Telephone (202) 429-1145
Fax (202) 429-1120
November 20, 2003
The guy who blew the whistle on Putnam
By Jayne O’Donnell, USA Today
WEYMOUTH, Mass - When he started working at Putnam Investment’s Quincy, Mass.
call center in March 2000, Peter Scannell had only a layman’s knowledge of how a
mutual fund company works.
But he knew from his days working at a casino in Lake Tahoe how to tell the good guys
from the bad. And it wasn’t long before Scannell decided the good guys weren’t
necessarily the ones who signed his checks.
Scannell caught onto efforts by outside investors, first from an electrical trades union
and later a boilermakers union, to make rapid trades in and out of Putnam (Parent MMC)
funds - a practice known as market timing.
Alarmed, Scannell blew the whistle to the Securities and Exchange Commission, which
didn’t act, and then to Massachusetts regulators, who did. What they heard led to state
civil fraud charges against Putnam, the resignation of its CEO, Lawrence Lasser, and
the withdrawal of more than $20 billion from its funds.
It also helped train a spotlight on market timing, which has ensnared eight of the USA’s
mutual fund companies in probes and charges.
“This would not have started without him,” says Matthew Nestor, Massachusetts’ director
of securities. “We owe him a debt of gratitude.”
In five hours of interviews over two days, Scannell, 47, said he turned in the big guys to
help the little guys everywhere. Mutual fund and retirement plan participants who
watched their holdings plummet while others got rich. In retaliation, he says, he was
attacked by a brick-wielding assailant allegedly wearing a boilermakers union sweatshirt
and is being trailed almost constantly....
The Massachusetts U.S. Attorney’s office is investigating possible criminal securities
fraud violations at Putnam, relating to market-timed trades by its managers. Scannell
met for two hours Tuesday with the office. The FBI is also investigating, say two people
involved in the matter....
Last Jan. 30, Scannell says he told his bosses he would no longer accept transfers from
known market timers. The next day, he took home the information he had compiled
because he planned to alert securities regulators. “I drove home looking over my
shoulder,” Scannell wrote in the report....
The guy who blew the whistle on Putnam
~ ~ ~
For more, GO TO > > > www.senate.gov/~govt-aff/_files/012704scannell.pdf
March 23, 2005
Citigroup, Putnam Pay
SEC Fines Over Fund
In three unrelated cases, federal regulators fined Citigroup Inc. and Putnam Investments
$20 million and $40 million respectively and a smaller brokerage firm $100,000 to
resolve allegations that they concealed from customers the fact that brokers were paid
to recommend certain mutual funds, creating a conflict of interest.
The Securities and Exchange Commission announced the separate settlements
Wednesday with Citigroup, the biggest U.S. financial institution; Putman, the seventh-largest mutual fund company, and brokerage Capital Analysts Inc.
Citigroup, Capital Analysts and Putnam, a unit of Marsh & McLennan Cos., neither
admitted nor denied wrongdoing as part of the agreements....
November 1, 2004
The Secret World Of Marsh Mac
By Marcia Vickers, Business Week
CEO Jeff Greenberg presides over the arrogant and tight-lipped culture of Marsh &
McLennan, where conflicts of interest abound. There's more trouble coming for the
world's largest insurance broker.
When Jeffrey W. Greenberg took the helm of notoriously secretive Marsh & McLennan
Cos. (MMC ), a $12 billion financial-services company, on Nov. 18, 1999, analysts were
happily buzzing that Greenberg was a gregarious, outgoing executive. The word on Wall
Street was that he would raise the profile of Marsh Mac with more public appearances
and open communication than his tightlipped predecessor, A.J.C. "Ian" Smith.
They couldn't have been more wrong. In the past four years, Greenberg sightings have
been scarce. The company, true to its secretive history, became even more cloistered.
But on Oct. 14, Marsh & McLennan was forced into a harsh public spotlight when New
York Attorney General Eliot Spitzer charged its insurance brokerage with fraud. In a civil
complaint filed in New York State Supreme Court, Spitzer alleges that the company
engaged in bid-rigging, price-fixing, and accepting payoffs from insurance companies.
Marsh & McLennan, the world's largest insurance broker, is paid millions annually to
manage clients' risks and crises. Now it's having epic problems of the same nature itself.
In a three-month investigation, BusinessWeek spoke with some 50 former and current
MMC employees, insurance industry executives, and investigators -- and discovered
that the firm's problems may well go far beyond Spitzer's initial charges.
BusinessWeek has learned that MMC and its executives could face a raft of further legal
and regulatory problems. Spitzer's office is mulling criminal charges against several
execs connected with the insurance brokering scandal. It is also looking into whether
Mercer, MMC's pension-consulting arm, and Putnam Investments, MMC's mutual-fund
company, push clients into buying Marsh insurance products.
As part of an industry-wide sweep, the Securities & Exchange Commission is probing
Mercer's alleged "pay to play" practices of requiring payoffs from money managers who
want it to recommend them to pension clients. At the same time regulators are
examining payments Putnam and other mutual-fund outfits make to companies to
ensure that their funds are featured in corporate 401(k) plans.
As if that's not enough, several class actions have sprung up -- at least one regarding
the alleged fraud at Marsh Inc., as the insurance brokerage is known, and others
Already, the legal onslaught is taking a toll. On Oct. 19, Moody's Investors Service
downgraded the firm's debt, citing concerns about "financial consequences" arising
from Spitzer's lawsuit. And fear that some of MMC's revenue streams could dry up has
knocked down its share price. In the four trading days following Spitzer's Oct. 14
announcement, the stock plummeted 48%, wiping out $11.5 billion in market cap.
At the center of the storm stands Jeff Greenberg, 53. If you ask almost anyone about
him, you'll hear that he is smart as a whip, incredibly knowledgeable about the insurance
business, well-spoken, and polished. Much like his father, Maurice R. "Hank"
Greenberg, 79, the legendarily hard-charging chairman and CEO of insurer American
International Group Inc. (AIG ), he has a history of being opportunistic when it comes
to scoring profits for his company. Even now, his defenders insist that he inherited
serious problems, particularly in the brokerage and mutual funds businesses, when he
moved into the top slot....
The firm's obsessive focus on secrecy helps keep any misdeeds under wraps, say the
sources. "Some companies have a culture based on kickbacks and undisclosed
financial arrangements, and their people are forced to remain silent about
wrongdoing," says Edward A.H. Siedle, a former Putnam compliance director and
SEC official who now heads the Center for Investment Management Investigations in
Ocean Ridge, Fla., which looks into pension fraud....
The day after Spitzer announced his charges, MMC's board expressed full confidence in
the CEO. That's no surprise: Greenberg chairs the board, which Nell Minow, editor and
corporate governance expert at the Corporate Library, says is fiercely loyal and "rife
with cronyism." Six of its 16 members are directly involved in running Marsh Mac or
one of its subsidiaries, says Glass Lewis & Co., a San Francisco proxy-research firm.
The board may be compelled to take action against top execs if enforcers now circling
the company are able to force fundamental changes in the way it does business.
Analysts and other experts say that could damage the company's financial health.
"If you eliminate all the questionable payments at Marsh & McLennan, you
eliminate half of their profits," says a former executive. Spitzer's complaint says
contingent commissions -- lucrative payments Marsh receives for steering unsuspecting
clients to certain insurers -- alone amount to $800 million a year, or about half the
insurance brokers' 2003 net income....
"Throwing the Quote"
Perhaps William Gilman, Marsh Global Broking's executive director of marketing and a
managing director, was doing the worrying. Gilman, in his 60s, is a larger-than-life
character who some call Kill Bill, after the Quentin Tarantino movies. The nickname
could also have something to do with an internal AIG memo about bidding for business
that was an exhibit in the Spitzer case: "Per W. Gilman -- get to right number [regarding
a bid] or 'we'll kill you."' Says a former colleague: "He's the kind of guy who stubs a
cigarette out in your coffee cup."
Gilman, says Spitzer's complaints, strictly enforced the system of rigged bids and
payoffs from insurers. He also rated insurers by how much they paid Marsh in contingent
commissions. A September, 2003, e-mail from his office released by Spitzer reads: "We
need to place our business in 2004 with those that...pay us the most."...
On Oct. 19, MMC suspended Gilman and four others.
Folks dealing with Marsh were supposed to abide by "Billy's Rules" -- a playbook Gilman
devised for insurers, according to someone familiar with the company. The rules were:
1) No "no's" (meaning Gilman should never be told "no" about any predetermined Marsh
arrangement). 2) Don't get stupid (never question Marsh's schemes). 3) If you get stupid,
we will broom your ass. 4) Never think you own your business, you only rent your
business. Marsh owns your business. "Billy's Rules," emblazoned on an office plaque,
hung in Gilman's office.
Gilman, according to the complaint, oversaw Marsh's "throwing-the-quote" scheme,
whereby some insurers were told to quote artificially high bids for business. Several
times, Gilman refused to allow AIG to relay competitive bids to clients, according to
Spitzer's complaint, warning AIG that "it would lose its entire book of business with
Marsh" if it didn't provide higher price quotes than the insurer Marsh favored...
The phony quotes were often referred to as "throwaway quotes," "protective quotes,"
"backup quotes," or "B quotes," says the complaint. In return, according to Spitzer,
Marsh protected AIG and other firms that played ball when it was their turn to win. AIG
declined to comment.
Gilman also staged what he called "drive-bys" -- in which insurers were asked to attend
presentations for prospective clients even when they knew they had no chance of
snagging the deal, according to Spitzer. A regional manager for Munich-American
RiskPartners, a division of American Reinsurance, who was so frustrated by constant
requests from Marsh for "live bodies" to attend drive-bys that he wrote in an all-caps e-mail: "We don't have the staff to attend meetings just for the sake of being a body. While
you may need a live body, we need a live opportunity."
Gilman may have enjoyed such power because Marsh already dominated insurance
brokering. By the late '90s, Marsh had cornered 40% of the global business thanks to
aggressive acquisitions. Marsh's grip tightened when it centralized control of broking
activities in New York. Analysts say Marsh's dominance allows it to control pricing, the
way insurance products are structured, and how premiums and payouts are disbursed.
"They have both their clients and insurers by the cojones," says a competitor.
But now it's MMC's top brass who are squirming. Being in the spotlight is highly
uncomfortable for MMC -- long known as a patrician, white-shoe firm with an air so
understated and secretive that at least one former exec likened it to working at the CIA.
Its ranks have included Ambassador L. Paul Bremer III, former Presidential Envoy to
Iraq, who recently ran MMC's crisis-consulting business; Stephen Friedman, President
George W. Bush's top economic adviser and former Goldman, Sachs & Co. (GS ) co-chairman, who was an MMC senior principal; Craig Stapleton, the husband of George
W. Bush's cousin Dorothy, who was an MMC president; and Lord Lang of Monkton, a
former British Member of Parliament who still sits on the board....
"I'd Love to Talk...But"
MMC certainly goes to extraordinary lengths to ensure loyalty. A former Putnam
executive recalls being grilled by a company psychiatrist in a hotel room for hours during
a job interview. Says the former exec: "Everyone has a Dr. [James] Terry story. He
would ask questions like: 'What's the worst thing that ever happened to you?' 'What are
your views on religion?' 'Who do you vote for?' They tell you they're looking for any signs
of malfeasance or criminality. But they're also looking for people who will fit in, lockstep,
at the company." An MMC spokeswoman claims that using a psychiatrist for screening
purposes is "industry practice." Terry could not be reached for comment.
Once they're in, most people who join MMC's upper echelons must sign binding
noncompete agreements, say both current and former employees. "Each time you
exercise stock options, you have to sign a new one," says one former exec. MMC calls
this, "a generally accepted practice." Employees who leave MMC and then disparage it
in public risk losing any deferred compensation to which they are entitled.
One former MMC exec told BusinessWeek: "Gee, I'd love to talk to you. There's a lot
to say. But they've got my money."
Since moving to rival broker Willis Group Holdings Ltd. (WSH ), a former Marsh exec
says he has been spied on by a private investigator who he suspects was Kroll Inc.,
which MMC bought in July for $1.9 billion. He says he believes MMC wants to ensure
that former employees are not using its proprietary information. MMC would not
comment without specific details. Another former exec says MMC constantly monitored
internal phone calls. MMC says it is unaware of this....
And despite the unfolding scandals, most industry players still seem to respect
Greenberg. He certainly got high marks in his early days as MMC CEO for his handling
of the aftermath of the September 11 World Trade Center attacks. Three years earlier,
Marsh had leased floors 93 to 100 in Tower One, and 294 MMC employees -- mostly
salesmen, secretaries, and analysts in their 20s and 30s -- lost their lives after the first
airplane hit. At services, Greenberg spoke movingly about the makeshift memorial that
had occupied an entire wall next to the cafeteria at MMC's Sixth Avenue headquarters.
Still, just days after September 11, Greenberg and top MMC execs met to figure out how
to profit from the disaster. They formed a subsidiary -- Axis Specialty Ltd. -- to sell
insurance to corporate customers at three or four times the rates before September
For some industry players the move recalled what Greenberg did in 1992 after
Hurricane Andrew slammed into South Florida and wiped out some $15 billion worth of
property. Jeff, who was working for dad at AIG, sent out an internal memo stating: "This
is an opportunity to get price increases now."
It was leaked to the press, which had a field day -- with one newspaper branding him "a
vulture." The memo moved Ralph Nader to complain and Florida regulators to freeze
When Jeff was working under his father in the early '90s, heading up AIG's domestic
brokerage group, Marsh sources say Hank raked him over the coals at a meeting in front
of top executives.
Hank, they say, had ordered Jeff to deal with a personnel issue, but Jeff had dragged his
feet. Says one: "Hank started yelling at Jeff in front of everyone: 'You either fix your
management problem, or I'll fix mine!"'
But the coup de grace came in 1995 when Hank abruptly promoted Jeff's younger, less
experienced brother Evan, making them equals in AIG's hierarchy. Two weeks later, Jeff
Evan, 49, is a college dropout and nonconformist who, by his own admission, had a bit
of a troubled youth. But he had a knack for the insurance business and rose quickly at
AIG. Unlike Jeff, Evan is one of the few people who stand up to his father. "Evan's
scrappy -- a yeller," says an insurance industry veteran....
But in 2000, Evan also resigned from AIG. He now heads Ace Ltd. (ACE), a Bermuda
company named in Spitzer's complaint -- along with AIG -- as one of those involved in
Marsh's alleged bid-rigging and price-fixing schemes.
Months after exiting AIG, Jeff landed at Marsh & McLennan, where he had worked as a
broker in the mid-'70s. As a partner in MMC Capital, the firm's risk-capital unit, he
excelled at building MMC's Trident Funds, which invested billions in various insurance
entities and real estate, and hoisted himself onto the fast track. He was determined "to
show up his dad and brother," says a source familiar with the family.
At Marsh Mac, Jeff was able to take advantage of the Greenberg name: Then-CEO and
Chairman Smith -- an old acquaintance of Hank's -- was Jeff's personal mentor. Jeff was
named chairman and chief executive of MMC Capital in 1996. By the beginning of 1999,
he had been promoted to president of Marsh & McClennan. And by the end of that year,
he was CEO. He was elected chairman in May, 2000.
Even if Greenberg did inherit the Marsh Mac mess, he's under fire for how he handled it.
"Despite seeming like a hero for ousting [former Putnam CEO Lawrence J. ] Lasser and
moving toward cleaning up Putnam, the truth is, Greenberg didn't address things until
he absolutely had to," says a former colleague.
In November, 2003, after Putnam was slapped with a securities-fraud charge, longtime
CEO Lasser, 61, was forced to resign. Regulators alleged that company brass had been
aware of illegal trading in Putnam funds since 2000....
A Frustrating Process
In the past year, Putnam has lost some $70 billion in assets. Recently, several pension
funds, including CalPERS, the California Public Employees' Retirement System, agreed
to let Putnam compete for its business, but with stipulations: Putnam must consider
pruning executive pay and ramp up financial disclosure....
But governance gurus still aren't happy with MMC or Greenberg. The Corporate Library
says the company still awards its execs excessive compensation. In 2003 it paid an
aggregate $60 million to its top five officers, vs. an average $21 million at other large
financial companies, according to Glass Lewis.
MMC says: "Our independent directors and outside consultants set compensation." This
past year, several large pension funds joined forces to propel an independent director,
Zachary W. Carter, a lawyer, onto the board.
Richard Ferlauto, director of pension and benefit policy at the American Federation of
State, County & Municipal Employees, says it was a slow-moving and frustrating
process: "Jeff thought he knew what was right, and he wasn't going to let anyone rock
Earlier this year Greenberg asked mentor Smith, 69, to come out of retirement to help
him. Insiders say Greenberg was intimidated by Lasser and needed Smith to negotiate
with the former Putnam CEO. Smith, who has an office close to Greenberg's, was
named chairman of Putnam. Greenberg also promoted Steven Spiegel, Lasser's right-hand man, to vice-chairman of Putnam....
Some of the bad stuff may have had to do with Putnam funds being pushed by Mercer,
Marsh Mac's pension-consulting arm. Mercer was long considered a sleepy, less
profitable outpost of the Marsh kingdom. Then, say insiders, in the mid-'90s it came
under pressure to turn bigger profits. That's when it started offering pricey conferences
for money managers at $50,000 to $60,000 a pop.
"If you don't attend those, it's nearly impossible to get on Mercer's list to manage
pension money," says Jack Silver, a former trustee at Chicago's teachers' pension
fund. MMC denies this. The SEC is investigating these allegations. And Spitzer will
likely look into whether Putnam pushes Marsh-brokered variable annuity products onto
"There's no disclosure about this conflict to Putnam clients," says Selva Ozelli, a
securities lawyer close to the investigation. There could also be an investigation into how
Marsh, allegedly slow to pay out premiums, profits from the float.
That means deepening troubles for Greenberg, who some critics say has done far too
little to shore up MMC's reputation over the past year.
"Print it, post it, and pray -- it seems as if that's all Greenberg's done when it comes to
ethics," says Patrick McGurn, special counsel at Institutional Shareholder Services Inc.,
a corporate governance consultant. Until now, say analysts, Greenberg's main focus has
been on acquiring more companies. Now he's forced to deal with spreading legal woes
and a public-relations nightmare.
Says David D. Brown IV, Spitzer's investment protection chief: "We're really just at the
beginning here. We're pursuing a number of leads and will follow them where they
In an Oct. 15 press release Greenberg announced that MMC was appointing a private
investigator to look into the alleged insurance broker fraud. It's a move some might have
applauded, except for one thing: He gave the job to the head of MMC's Kroll -- who's
now the head of Marsh.
July 6, 2004
SEC eyeing fund payments
Regulators want to know if firms
pay for shelf space
By Kathie O’Donnell, CBS MarketWatch
BOSTON - The Securities and Exchange Commission Tuesday said it’s looking into
payments that mutual funds make to 401(k) plans to determine what use is made of
Fidelity Investments, T. Rowe Price Group Inc., and Putnam Investments, a unit of
Marsh & McLennan Cos. (MMC) were among firms that received questionnaires from
the SEC which is examining payments that funds and their advisers make to 401(k)
plans, consultants and plan platforms....
“We want to better understand the nature and purpose of these payments and their
disclosure, including whether they’re reimbursements for plan expenses or payments for
shelf space or some other purpose,” the agency said in a statement....
Putnam spokeswoman Nancy Fisher confirmed the company received a questionnaire
regarding its defined contribution practices.
“We are cooperating fully,” she said....
What goes around comes around ...
October 20, 2004
Investors Are Losing Ground as
Insurance Inquires Expand
By Gretchen Morgenson, The New York Times
The disastrous decline in Marsh & McLennan’s stock that has followed Eliot Spitzer’s
lawsuit of last week has injured a broad array of institutional and individual investors.
But the pain of losing almost 50 percent in share value is perhaps most excruciating to
the thousands of Marsh & McLennan employees who have bought Marsh stock in the
company’s employee stock purchase plan or in their retirement plans.
In the months after the market crash of 2000, the lesson of diversifying beyond one
company’s stock was hammered home. But as the market recovered, many workers
seemed to forget that important lesson. Marsh employees were among them; at the end
of last year, one employee-benefit plan had $1.3 billion invested in Marsh &
Now, of course, the risk in those holdings is all too apparent. But employee-benefit
experts say that Marsh may be putting its 60,000 employees at additional risk, even as it
enriches itself, by limiting the alternative investments to mutual funds that are for the
most part managed by its Putnam Investments subsidiary.
“Fiduciaries of 401(k) plans are charged with making decisions that are in the best
interests of the participants in the plan,” said Edward A. H. Siedle, a former
Securities and Exchange Commission lawyer who is president of the Center for
Investment Management Investigations, a unit of the Benchmark Companies in Ocean
Ridge, Fla., that investigates money management abuses on behalf of pensions. “When
they are also employees of a money management company that gets hired by the plan
there is a conflict of interest. This is especially problematic when the money manager is
a high-cost, poor performer.”...
Given that the company is in the financial services industry it is perhaps not surprising
that workers at Marsh & McLennan and its subsidiaries have been given many
opportunities to buy their company’s stock or its money management services. There is
a pension plan, a stock purchase plan, 401(k) accounts, stock option grants and a cash
bonus deferral plan to name a few. And in all cases, Marsh stock or Putnam funds
dominate the offerings.
Sadly for these employees, Marsh shares have gone pretty much straight down since
Mr. Spitzer filed his lawsuit against the company, contending that bid-rigging and other
improprieties occurred in Marsh’s insurance brokerage unit.
Yesterday, Marsh stock fell another $1.47 a share, or 5.7 percent; it closed at $24.10
and has lost 48 percent since Mr. Spitzer filed the suit.
Workers who have participated in the Marsh stock purchase plan have taken perhaps
the biggest brunt of this slide. Last year, 3.8 million shares were bought in the stock
plan, well above the 2.85 million Marsh shares purchased in the plan in 2001. And
employees working in the company’s international division, which is broken out
separately, bought 1.2 million shares in 2003, far more that the 717,000 shares they
purchased during the previous year.
Taken together, the shares bought by employees in the Marsh stock purchase plan
amounted to five million shares, or almost 1 percent of the 533 million shares
outstanding at the company at the end of last year.
Marsh employees have also bought their company’s stock aggressively in various 401(k)
plans, a decision they now almost certainly rue. According to Marsh filings, at the end
of last year, a defined-contribution plan for Marsh & McLennan employees has assets of
Almost 60 percent of the plan’s assets were in Marsh stock - $1.3 billion worth.
Another $938 million in the plan was in funds managed by, you guessed it, Putnam
Investments. Of the 17 fund choices on the plan’s menu, 10 are Putnam Funds....
At Putnam Investments, employees have their own 401(k), with assets of $441 million
at the end of last year. As is typical in such accounts, Putnam employees can invest
their contributions, and any that are matched by the company, in a variety of investment
One of those options is Marsh stock and as of December 2003, Putnam employees held
344,000 shares with a value of $16.5 million, or $47.96 a share. Those shares, if they
are still in the plan, have been cut in half....
Most peculiar, the Putnam 401(k) plan offers no low-cost index funds intended to mimic
the performance of a broad market average, like the Standard & Poor’s 500 index. Such
funds are usually ubiquitous in 401(k) plans. Mr. Siedle said such an omission at any
plan was “an invitatation to litigation.”...
Trustees of the 401(k) plan for Putnam employees are Francis N. Bonsignore, senior
vice president for executive resources and development at Marsh & McLennan, and
Sandra S. Wijnberg, the company’s chief financial officer. They have a fiduciary duty to
plan participants to provide the best array of investment options. But as Marsh
executives, they may be tempted to benefit their company by propelling their workers
into Putnam funds. The Marsh spokeswoman declined to comment of the trustees.
About the only Marsh employee plan not holding Marsh stock is the defined-benefit
pension plan, which had $2.4 billion in assets as of last December. Employees in this
plan do not choose the investments; money managers oversee the money.
But it is in the selection of those money managers that Marsh may be putting its
interests ahead of its employees. Of the $2.4 billion under management, $1.8 billion is
overseen by Putnam. And, adding to the potential for conflicts, the pension plan
employs as an investment consultant Mercer Inc., the Marsh subsidiary that helps
pension funds decide which money managers to hire.
Given Mercer’s role as a consultant, it is troubling but perhaps surprising that so much of
the Marsh pension plan would be managed by Putnam.
- For more on pension plan fraud, GO TO > > > The Great Nest Egg Robberies.
June 29, 2004
Marsh & McLennan Creates Outsourcing Unit
NEW YORK (AP) - Marsh & McLennan Cos, a professional services firm, combined the
defined contribution administration business of Putnam Investments and Mercer HR
Outsourcing to offer global human resources outsourcing services, the company said.
The combined unit, Mercer Human Resource Consulting, will oversee the
organization, and the U.S. arm of the business will be led by Dave Carlson, Mercer’s
national practice leader for human resources outsourcing, the company said....
May 19, 2004
Marsh & McLennan to buy Kroll
By Eric Dash, The New York Times
Marsh & McLennan, the giant insurance and financial services company, has agreed to
pay $1.9 billion in cash for Kroll, a leading corporate security business.
The transaction, announced Tuesday, will broaden Marsh’s reach into data recovery and
corporate detective work at a time when the New York company’s three main
businesses face separate regulatory investigations.
Jeffrey Greenberg, chairman and chief executive of Marsh, declined to discuss the
effect of those investigations. He preferred to highlight the “strategic fit” between New
York-based Kroll, which helped find the hidden assets of Saddam Hussein in the early
1990s, and his own company, which provides insurance brokerage services to corporate
clients through Marsh Inc., money management through Putnam Inc., and consulting
through Mercer Inc.
“We see this transaction as being able to help us serve clients more effectively with
complementary services,” Greenberg said, noting Kroll’s expertise in employee
background checks, data recovery and global restructuring advice, in addition to its
traditional investigative work....
Given the growth potential and cost savings, Greenberg said that he expected the
transaction to add to earnings in 2005. Still, some analysts expressed concern that the
price was steep and noted the difficulty of cross-selling services.
Marsh now derives a little less that 10 percent of its $11 billion in revenues from risk-related consulting and processing services. But Greenberg said that heightened global
security concerns and more stringent corporate compliance requirements had led to
double-digit growth in the area.
Greenberg said he had approached Jules Kroll, whom he has known for about a dozen
years, in February about a potential acquisition of the company that he founded....
Upon the deal’s completion, Kroll will become part of the risk and insurance subsidiary of
Michael Cherasky, Kroll’s chief executive, will run the new unit and Jules Kroll will
serve as vice chairman....
For more, GO TO > > > Kroll, The Conspirator
November 8, 2003
State pension board fires Putnam Investments
By Deborah Adamson, Honolulu Advertiser
The state Employees' Retirement System voted yesterday to fire Putnam Investments
and pull back the $440 million managed by the firm after it was charged with securities
Hawai'i joined a growing number of states whose public employee pension plans have
fired Boston-based Putnam, the fifth-largest mutual fund firm in the country. In the past
two weeks, states have taken away $6 billion from Putnam as confidence eroded in
the scandal-tainted company.
The ERS board said its action against Putnam, which managed 5.5 percent of ERS
assets, was based on a lack of trust, not performance.
"We have to hold ourselves as board members to the highest standards and we have to
hold the people who work for us to the highest standards," said Rick Humphreys, vice
chairman of the state pension fund board of trustees.
The decision to fire Putnam will not result in any losses to 93,000 public employees and
pensioners covered by the plan. The pension plan's costs will be limited to some trading
expenses as it switches from one money management firm to another.
The money managed by Putnam will be put in an index fund that tracks the S&P 500
until the board chooses another manager, which could come as soon as Nov. 21.
Regulators have charged that two of Putnam's money managers engaged in market
timing. In market timing, fund shares are rapidly traded. Such activity boosts trading
costs and volatility in the fund to the detriment of long-term investors. While not illegal,
market timing is prohibited by Putnam's policy.
Putnam fired the two managers. One of them, Justin Scott, had oversight over large-cap
growth stock investments in which the state pension plan had money, said ERS
consultant Callan Associates.
When the market timing activities were discovered, Putnam told the managers to "cut it
out" but didn't go much further, Ron Peyton, president of San Francisco-based Callan,
told the state pension board. The response later "created controversy and outcry over
corporate governance issues in Putnam."
"The action and inaction of management has been a troubling point," added Kimo
Blaisdell, the state ERS chief investment officer.
Putnam's firing is a warning to other managers, Humphreys said.
"We will do that to any manager that we find are unethical in their dealings," he said.
The ERS board also voted to send inquiry letters to two other investment firms, Invesco
and Jennison, an indirect subsidiary of Prudential, which are under investigation for
conducting trading activities that favored some investors to the detriment of others.
Invesco handles $260 million in real-estate assets for the state pension plan while
Jennison manages $207 million in small-cap stocks. The board is seeking more
information about any investigations.
The state pension plan also reported yesterday that its investments grew by 2.89
percent in the quarter ended Sept. 30, compared to the quarter before that. The median
growth in the quarter for large public funds tracked by Callan Associates was 3.05
percent. Over the past 12 months, ERS has returned 16.95 percent vs. 17.65 percent for
large public funds.
The board also took action on underperforming managers. It left Bank of Hawai'i,
Schroder Capital and Capital International on its watch list and took off Pacific Income
Advisors because of improved performance. The pension added Bank of Ireland and
Bradford & Marzec to the watch list; it also decided to send warning letters to T. Rowe
Price and Independence Investment Associates for underperformance.
December 8, 2003
Funds Want Marsh & McLennan Board Changes
By Associated Press
NEW YORK -- Four big public pension funds plan to sponsor a shareholder resolution to
change the board of Marsh & McLennan Cos., the parent of Putnam Investments, in
response to the company's role in the widening mutual-fund probe.
The pension funds will seek access to Marsh & McLennan's proxy to nominate and elect
independent directors, pending approval by the Securities and Exchange Commission of
a new rule governing shareholder access to corporate proxies.
The pension funds involved are the California Public Employees' Retirement System;
the California State Teachers' Retirement System; the New York State Common
Fund; and the AFSCME Employees Pension Plan, a union pension fund.
In a news release issued Monday, chiefs of the pension funds sharply criticized Marsh &
McLennan and Putnam, even going so far as to compare the companies to Enron
Corp., the former energy giant.
They singled out Lawrence Lasser, former Putnam CEO, for criticism related to what
they called his "excessive compensation."
"Marsh & McLennan deserves to be the first company in U.S. history to face a
binding proxy access proposal because of its gross failure to have proper
controls that could have prevented the Putnam disaster," AFSCME pension
Chairman Gerald W. McEntee said in the release....
In October, public pension funds began firing Putnam as a manager of their retirement
assets after the firm was charged in an industrywide probe of mutual fund trading
Launched in September by New York Attorney General Eliot Spitzer, the investigation
is looking into rapid-fire and after hours trading of mutual funds by favored investors.
Some 11 states, including Vermont, Massachusetts and Rhode Island, ended up pulling
out of Putnam, citing concerns related to the probe.
"Investors have pulled more than $32 billion in assets out of Marsh's Putnam subsidiary
due to its involvement in this terrible mutual fund scandal, and Marsh's stock price is
down about 10 percent," New York State Comptroller Alan Hevesi said in the news
"I can't think of a stronger case worthy of shareholder involvement, and I have no doubt
that given the chance, shareholders will respond favorably to our initiative."
November 1, 2003
More Clients Dump Putnam in Scandal
Company’s future potentially on the line over trading issues
By Justin Pope, Associated Press
BOSTON - Pension funds in Pennsylvania, Iowa and Rhode Island fired Putnam
Investments yesterday, joining a growing exodus of customers abandoning the
embattled fund company.
They joined Massachusetts, New York and Vermont pension officials, as well as some
universities, who are taking their business away from Putnam following accusations by
regulators that four of its fund managers engaged in personal short-term investing at
In just two days, public pension funds have announced plans to pull at least $4.4 billion
out of the company, which lists $272 billion in assets under management. New
England Pension Consultants, a firm that advises 190 pension plans with $150 billion in
assets, has recommended clients get out of Putnam international stock funds....
Putnam, a unit of Marsh & McLennan, had no immediate comment yesterday on the
latest departures of clients....
October 29, 2003
Putnam, 2 ex-officers
face fraud charges
By Justin Pope, Associated Press
BOSTON - State and federal regulators accused Putnam Investments and two of its
former investment officers of fraud yesterday, the first formal allegations of wrongdoing
by a mutual fund company in what is becoming a scandal for a once pristine industry.
The filings by the Securities and Exchange Commission and the Massachusetts
Securities Division allege that Boston-based Putnam improperly allowed six employees,
including four fund managers, to make market-timing trades using funds they oversaw
and information not available to the public.
The civil actions against Putnam mark the first time a fund company has been accused
of breaking the law, although New York authorities have accused three other individuals
and a hedge fund of fund-related wrongdoing.
Several dozen fund companies have been subpoenaed in the investigation. The
situation has become a black mark on the $7 trillion mutual fund industry, which had
prided itself on steering clear of the corporate scandals of recent years. Yesterday,
authorities indicated more fallout is ahead.
“This should send a clear message to everyone in the fund business they should
examine their books, because we will be examining them,” Massachusetts Secretary of
State William Galvin said.
The complaints filed yesterday named two of the managers: Omid Kamshad and
Justin Scott, identified as managing directors and chief investment officers of
Putnam’s International Core Equity Group and International Equities Group
respectively. Authorities said further action still might be taken against the four other
Putnam employees alleged to have participated in the trading.
The SEC cited Putnam for failing to deter short-term trading and for fraud in connection
with the sale of the funds.
Putnam is also accused of defrauding customers by allowing members of a New York
union retirement plan to engage in market-timing of certain funds even though those
funds prohibited the practice...
Market-timing is not illegal, but many funds discourage the process because it hurts
long-term shareholders. Market timers jump in and out of mutual funds, trying to take
advantage of late information that may affect the price of a fund before that fund’s daily
price can be set. Indirectly, profits won by market timers skim money from others who
The Massachusetts complaint claims Putnam ordered Kamshad and Scott to stop
market-timing in 2000 but did not punish them or require them to return the profits.
<<< FLASHBACKS <<<
SEC Info: Putnam Convertible Opportunities & Income Trust (just one of Putnam’s
many funds) - On 6/26/95:
Trustees and Officers
George Putnam. Mr. Putnam, age 68, is the Chairman and President of the Fund and
of the other Putnam funds. He is the Chairman and a director of Putnam and Putnam
Mutual Funds Corp and a director of Marsh & McLennan Companies, Inc, their
parent company. Mr. Putnam is the son of the founder of the Putnam funds . . . Mr.
Putnam currently also serves as the Director of the Boston Company, Inc, Boston Safe
Deposit and Trust Company, Freeport-McMoRan, Inc., a mining and natural resources
company, General Mills, Inc. . . . Houghton Mifflin Co, a major publishing company, and
Rockefeller Group, Inc., a real estate manager....
George Putnam III. Mr. Putnam, age 43, is the President of New Generation Research,
Inc., a publisher of financial advisory and other research services relating to bankrupt
and distressed companies, and New Generation Advisers, Inc., a registered investment
adviser which provides advice to private funds specializing in investments in such
Eli Shapiro. Dr. Shapiro, age 78, is the Alfred P. Sloan Professor of Management,
Emeritus at the Alfred P. Sloan School of Management . . . Dr. Shapiro currently serves
as a Director of Nomura Dividend Income Fund, Inc, a privately-held registered
investment company managed by Putnam. He is also a past Director of many
companies, including . . . Connecticut Bank and Trust Co, the Federal Home Loan
Bank of Boston . . . Travelers’ Corporation, an insurance company....
A.J.C. Smith. Mr. Smith, age 60, is the Chairman and CEO of Marsh & McLennan
Companies, Inc. . . . Mr. Smith is a Director of the Trident Corp, and also serves as a
Trustee of the Carnegie Hall Society, the Central Park Conservancy and The
American Institute for Chartered Property Underwriters (CPU)....
* * *
Marsh & McLennan Shares Fall Amid Concerns
New York, March 22 , 2001 (Bloomberg) -- Marsh & McLennan Cos. Inc. shares fell to
a 52-week low amid concerns that falling equity markets will cut into earnings at its
Putnam Investments unit.
Shares of the world's biggest insurance broker fell $1.30 to $88.10, after earlier dropping
to a low of $85.26.
''We're trying to avoid the stock,'' said Paul Raman, an analyst at Glenmede Trust Co.,
which has sold all its Marsh & McLennan shares. ''Its earnings have been driven by
Putnam Investments for the last five or six years. That engine has run out of gas,''
Marsh & McLennan is expected to earn $4.62 a share in 2001, according to a survey of
10 analysts by First Call/Thomson Financial. A month ago, it was expected to earn $4.70
a share, according to First Call.
Putnam's assets under management were $344 billion at the end of February, compared
with $370 billion at the end of 2000 and $406 billion at the end of the third quarter.
Putnam, the fourth largest U.S. fund company, reported operating profit of $245 million
in the fourth quarter, up from $209 million a year earlier.
A number of Wall Street analysts, including Alice Schroeder of Morgan Stanley Dean
Witter & Co. and Jay Cohen of Merrill Lynch & Co. have recently lowered earnings
estimates for Marsh & McLennan because of concerns about earnings at Putnam.
Putnam Investment's Former Vice
President Convicted of Fraud
Boston, March 26, 2001 (Bloomberg) -- A former Putman Investments Inc. vice
president was convicted of conspiracy for plotting to illegally transfer $78,909 of Putnam
Paul Murphy, 39, who served as vice president of the company's control division, was
convicted on one count of conspiracy and faces up to five years in prison and a fine of
$250,000, U.S. Attorney Donald Stern said. He will be sentenced June 20.
Murphy and former Putnam employee Robin Kelly transferred the money from a
miscellaneous account in October 1999 into a Vanguard Group account that Kelly
shared with her mother, the government said. Kelly, a former assistant vice president,
pled guilty in federal court July 7.
Putnam said at the time of Murphy's indictment that no customer accounts were affected
by the illegal transfer. Putnam, a unit of New York-based Marsh & McLennan Cos.,
manages more than $400 billion for 12 million individual shareholder accounts and
1,000 institutional clients.
* * *
Putnam's Lasser Paid $35 MILLION in 2000;
Gets Contract Extension
New York, March 29, 2001 (Bloomberg) -- Putnam Investments' Chief Executive
Lawrence Lasser received $35 million in compensation last year, a 30 percent raise,
and a contract extension through 2005, according to a Securities and Exchange
As head of the fourth-biggest U.S. mutual fund company, Lasser received a salary of $1
million, a bonus of $33 million and other compensation of $1 million, the filing said. In
1999, he earned $27 million, including a bonus of $26 million.
Putnam's operating income rose 23 percent to $1 billion last year. Its mutual fund assets
fell 19 percent to $343.5 billion at the end of February from $422.2 billion last March,
according to Boston-based research firm Financial Research Corp.
New York-based Marsh & McLennan Cos., Putnam's parent, said in the filing that
under the contract extension Lasser will receive options for 50,000 shares of Marsh &
McLennan stock, 100,000 restricted stock units of Putnam and options to acquire 50,000
class B shares of Putnam.
Lasser also was granted a deferred special payment equal to the value of 150,000
shares of Marsh & McLennan, the biggest insurance broker, as of Feb. 15, 2001, worth
about $16.7 million.
He also is entitled to receive an additional award of options on 50,000 shares of Marsh &
McLennan in March of 2002, 2003 and 2004, as well as an additional award of 50,000
class B shares of Putnam in March 2002.
Jeffrey W. Greenberg, Marsh & McLennan's chairman and chief executive, received
$7.2 million in cash compensation in 2000, 45 percent more than in 1999....
Marsh & McLennan said it also gave Greenberg 200,000 10-year stock options that
could be worth $32.9 million....
Marsh & McLennan shares, which gained 22 percent in 2000, have lost almost 22
percent of their value this year.
Putnam's Jennifer Leichter Resigns
From $1.4 Billion Junk Fund
Boston, April 2, 2001 (Bloomberg) -- Jennifer Leichter, who managed the $1.4 billion
Putnam High Yield Trust II, resigned to pursue ''other interests,'' said Putnam
spokesman Matthew Keenan.
The fund returned 4.1 percent in the first quarter, after declining 8.5 percent last year.
Leichter, who joined Boston-based Putnam in 1987 as a high yield bond analyst, quit on
Friday. She was previously a high yield bond analyst for Kidder Peabody.
Putnam, the No. 4 mutual fund company, manages $8.4 billion in high yield bond
* * *
Some interesting incestuous relationships (circa 2001)...
• Citigroup is the 3rd largest institutional investor in Marsh & McLennan.
• Citigroup is the 3rd largest institutional investor in Chubb Group (Federal
Insurance Co. et al)
• Citigroup is the 10th largest institutional investor in American International
• Citigroup is the 6th largest institutional investor in L-3 Communications.
• Putnam is the largest institutional investor in L-3 Communications.
• Putnam is the 2nd largest institutional investor in Chubb Group.
• Putnam is the 6th largest institutional investor in Citigroup.
• Putnam is the 5th largest institutional investor in AXA Financial.
• Putnam is the 3rd largest institutional investor in Starwood Hotels.
• Goldman Sachs is the 10th largest institutional investor in Starwood Hotels.
• Wellington Management Co. is the 9th largest institutional investor in Starwood
• Wellington Management Co. is the #1 institutional investor in Marsh &
• Putnam is the #1 institutional investor in Harrah’s Enterprises.
• Putnam is the 6th largest institutional investor in Isle of Capri Casinos.
• Goldman Sachs is the 3rd largest institutional investor in Isle of Capri Casinos.
• etc., etc., etc.
For more on Chubb Group, GO TO > > > The Chubb Group
For more on Citigroup, GO TO > > > Vampires in the City
For more on Goldman Sachs, GO TO > > > Dirty Gold in Goldman Sachs
For more on L-3 Communications, GO TO > > > Tracking the Titan
For more on pension plan fraud, GO TO > > > The Great Nest Egg Robberies
<<< FLASHBACK <<<
October 25, 2001
Statement of John T. Sinnott, Chairman and CEO,
Marsh, Inc. Before the House Financial Services
Committee "Protecting Policyholders from Terrorism:
Private Sector Solutions"
Mr. Chairman and members of the Subcommittee, I am John T. Sinnott, Chairman and
CEO of Marsh, Inc, headquartered in New York City.
Marsh is the world's largest risk management and insurance brokerage firm. We have
35,000 employees and serve clients in over 100 countries around the world. We also
serve virtually all of the major insurance firms with reinsurance broking and related
services through our Guy Carpenter unit. My testimony is on behalf of my firm as well
as the member firms of the Council of Insurance Agents and Brokers.
I'd like to thank you, Mr. Chairman, for giving me this opportunity to testify today on the
topic of private sector solutions to the burgeoning terror insurance availability crisis in
the wake of the September 11 attacks....
The events of that day were singularly devastating on one industry - the financial
services industry - not only in business terms, but also in human terms.
The World Trade Center housed several companies from the banking, securities and
insurance industries that must now deal not only with the new business challenges
facing them as a result of the attacks but also with the loss of colleagues and
employees. Within the insurance industry, the brokerage community was hit particularly
hard. Marsh maintained offices in both of the World Trade Center towers and the
space that we occupied in the north tower comprised the floors directly struck by the first
aircraft. No one in those offices at the time escaped.
In fact, of the 1900 members of the Marsh & McLennan Companies working in both
towers (or who were visiting that day) 294 were lost. Another colleague was a
passenger aboard one of the aircraft....
The events of September 11 have changed the landscape of commercial insurance in a
way that I have not seen in my 36 years in the business. To be sure, there have been
trying times in the past - the liability crisis in the mid-1980s, the property catastrophe
coverage problems in the early 1990s following Hurricane Andrew, to name a couple.
Marsh rose to the occasion during both those crises to help our clients secure the
coverage that they needed to adequately protect their businesses. This is a function that
is quite common in the brokerage community - not merely selling insurance products, but
identifying client needs and developing new and innovative products or programs to
address coverage shortfalls and to make our clients more successful.
In response to the mid-1980s liability crisis, Marsh played a leading role in the creation
of the insurance and reinsurance companies ACE Limited in 1985 and XL Capital in
1986. These companies were formed to provide excess liability and directors' and
officers' liability coverages at a time when the market could not provide the necessary
capacity. These companies were very successful in providing much-needed market
capacity and eventually were spun off from Marsh. They exist as major insurers today.
Similarly, Marsh played a role in the creation of Mid Ocean Limited during the property
catastrophe reinsurance crisis following Hurricane Andrew in 1992. This company has
also done very well in meeting the needs voiced by our clients.
It was in this same spirit of responding to customer needs that MMC Capital, our sister
company, recently announced the formation of AXIS Specialty Limited, a new
insurance and reinsurance company formed to provide capacity needed in the wake of
the September 11 attacks. AXIS has an initial capitalization in excess of $1 billion, and
will begin underwriting later on this quarter....
But I must tell you in all candor that what your committee heard has been hearing over
the past three weeks is true - there is an immediate crisis that demands your
attention. In the current unique, and hopefully short-term, environment of uncertainty,
the private sector alone will not be able to provide the insurance capacity America's
businesses need to conduct their operations.
Government involvement is needed until the environment becomes secure and
returns to a state of more normalcy....
May I close by saying that my firm has been severely affected by the events of
The first aircraft directly struck our offices in the World Trade Center and we lost
295 members of our corporate family. That was the real tragedy and is still with us in
our offices and hallways. We also incurred huge losses of property and equipment.
So I speak here today from painful personal experience - and perhaps with a deeper
understanding of what our clients face as they look to an uncertain future. Mr. Chairman,
let me restate that we are on the brink of an availability/affordability crisis
insurance caused by the terrorist events....
I commend you for holding this hearing, for your efforts to create a solution that restores
and strengthens the private marketplace, and I urge you to work with your colleagues in
Congress and the Administration and within our industry to find workable answers....
See also: John Sinnott
For later news on the 9-11 tragedy and coverup, GO TO > > > The Eagle Hooded
January 7, 2002
Turning to sleepy insurance
to jazz up portfolios
By Beth Healy, Boston Globe
Forget tech. The hot new deals for deep-pocketed private equity firms are in the least
sexy business on the planet: insurance.
In the wake of Sept. 11, a host of new insurers and reinsurers are opening their doors,
with billions of dollars in backing from existing insurers and big-name buyout firms,
including Boston's Thomas H. Lee Co. Lee recently has bet $475 million on three
Bermuda insurance deals, after a year in which it made only one investment (in phone
book publisher TRW) from its massive $6.1 billion fund.
Other investors leaping into the sector include Blackstone Group; Goldman, Sachs &
Co.; and Warburg Pincus, all based in New York. Marsh & McLennan, the New York
insurance brokerage (and parent of Boston fund manager Putnam Investments) is
backing a start-up, as is Chicago's Aon Corp....
This is opportunism at its best. The last time new insurers launched was after
Hurricane Andrew struck in 1992. Rates on property-casualty insurance policies soared
following that natural disaster, much as they've skyrocketed since the terrorist attacks.
Some customers are seeing renewal rates jump 300 percent and 400 percent.
And they're faced with having to buy more coverage, as their sense of risk has increased
and as acts of terror are struck from typical policies. New kinds of special coverage will
be required to guard against losses from terrorism and acts of war.
All this adds up to big new potential revenue streams for at least six —— and possibly
as many as a dozen —— new insurers and reinsurers (firms that pick up excess liability
from other insurers) and their investors. The start-ups are virtually all based in Bermuda,
not for the golf, but for its tax-haven status.
And they are filling a need, industry experts say, with losses sustained by current
insurance players estimated conservatively at $40 billion. The new entrants figure they
can jump in and be competitive because they aren't grappling with losses from the latest
"A lot of capital went out of the business with the catastrophe and has to be replaced,"
said Lanny Thorndike, managing director at Century Capital, a Boston-based insurance
Because of Sept. 11, he said, "there's a higher appreciation for risk, and with that
comes higher returns for those who assume the risk."...
And now for a closer look at some of the Marsh Birds
that nest at Putnam Investment Management
A. J. C. Smith - Chairman of the Board and CEO of Marsh & McLennan Companies
since 1992. Mr. Smith is a trustee of the various mutual funds managed by Putnam
Investment Management, Inc., a subsidiary of MMC. He is also a member of the Board
of Overseers of the Joan and Sanford I. Weill Graduate School of Medical Sciences of
In 1998, A.J.C. Smith raked in $6.5 million in salary, bonus and other compensation
from Marsh & McLennan Companies. Add to that $11.3 million in stock option grants,
and Mr. Smith goes to Washington with a total of $17.9 million. He also has $25.2
million in unexercised stock options from previous years.
On Nov 18, 1999, the Board of Directors of Marsh & McLennan Companies elected
Jeffrey W. Greenberg as CEO to succeed A.J.C. Smith, age 65, who will remain
chairman of the board until he retires from the company at its 2000 annual meeting. It
was announced that Mr. Smith will continue as a member of the company’s board....
Conseco, Inc. - Indiana-based insurance company.
August 14, 2002
Putnam may suffer as
Conseco's troubles mount
By Svea Herbst-Bayliss
BOSTON, Aug 14 (Reuters) - Mutual fund firm Putnam Investments, already facing
declines in money management fees, may suffer another blow this quarter as a stake in
insurer Conseco Inc is likely to shave millions off its pre-tax income.
In a regulatory filing, Putnam's parent, No.1 insurance broker Marsh & McLennan Co.,
said owning a stake in the ailing Carmel, Indiana-based insurer and financial company
could cost the Boston-based money manager up to $15 million....
Conseco last week missed a bond interest payment and said it plans to extend three
more bond interest payments due later this month as it begins work on restructuring its
Putnam is entangled in the Conseco saga because it owns an equity interest in Boston-based buyout firm Thomas H. Lee Partners, L.P. whose Thomas H. Lee Equity Fund
IV L.P. owns a chunk of Conseco's public stock.
"The significant capital restructuring that may result from the actions announced by
Conseco may adversely impact the value of Fund IV's investment in Conseco, and
consequently the value of Putnam's investments related to Fund IV," Marsh said in the
The news comes at a critical time for Putnam as America's fourth-biggest fund firm's
portfolios take a battering in the stock market's relentless declines.
The firm drew heavy criticism for its decision to stop naming individual fund managers of
its funds, a step that some firms had hoped would keep them out of the limelight when
managers quit or are fired.
Amid investor complaints, Putnam quietly reversed itself and went back to naming fund
managers earlier this summer.
Putnam's woes have already hampered Marsh & McLennan's earnings in the second
quarter when money management fees fell even though insurance-related revenues
offset the drop....
In the second quarter, investment management revenue at Putnam fell to $581 million
from $696 million a year ago while average assets under management, used to
calculate fees for managing money, slumped 11 percent to $301 million.
Putnam's growth funds, once a main money maker, have been a particular trouble spot
as assets under management there tumbled to $39 billion from $76 billion over the
year. Putnam has also laid off scores of employees to help trim costs.
Conseco's troubles have also deepened in the last weeks and on Monday the New York
Stock Exchange moved to kick it off the exchange after it suspended trading its stock
which was last quoted at 34 cents a share. REUTERS
* * *
September 11, 2001 <<< (Note the date!)
Conseco Sues Six D&O Insurers Over
Conseco Inc. is suing six of its own insurers, claiming they are attempting to dodge
legitimate potential claims on directors and officers policies bought by the
In its annual 10-Q filing with the U.S. Securities and Exchange Commission, Conseco
said it "maintained certain directors' and officers' liability insurance that was in force at
the time the Indiana securities and derivative litigation was commenced and, in our view,
applies to the claims asserted in that litigation," according to BestWire.
The Indiana litigation involves 45 lawsuits filed against Conseco in U.S. District Court
for the Southern District of Indiana. Conseco said 19 of those cases were putative
class actions on behalf of people or entities that purchased the company's
common stock during alleged class periods that generally run from April 1999 through
In those cases, plaintiffs allege that the company and individual directors and officers
violated federal securities laws by, among other things, making false and misleading
statements about the then-current state and future prospects of Conseco Finance –
particularly with respect to performance of certain loan portfolios of Conseco Finance –
which allegedly rendered the company's financial statements false and misleading.
Because it had directors and officers coverage, Conseco didn't establish any
reserves for possible losses with respect to those claims, the company said in its 10-Q. "The insurers have denied coverage for those claims, so we commenced a lawsuit
against them on June 13, 2001, in Marion County Circuit Court in Indianapolis," Conseco
Named as defendants are National Union Fire Insurance Company of Pittsburgh, a
subsidiary of American International Group Inc., Royal Insurance Company of
America, a unit of Royal & Sun Alliance; Westchester Fire Insurance Co., a unit of
Ace Ltd.; RLI Insurance; Greenwich Insurance Co., a unit of XL Capital Ltd., and
HSBC Insurance Brokers Ltd.
Morgan Stanley analyst Alice Schroeder, in an Aug. 31 property/casualty insurance
briefing, wrote that she doesn't believe an unfavorable outcome for the defendants would
have a material impact on the earnings of AIG, XL or Ace.
Schroeder said in her report that AIG's National Union Fire "was apparently the
primary carrier issuing the policy, which carries limits of $10 million."
"With jury awards rising at a rapid pace, insurers are getting tougher to protect against
larger losses--whether they succeed remains to be seen," Schroeder said in her report.
"This event also confirms our view that the D&O market remains difficult, and prices must
continue to rise."...
For much more on Conseco, GO TO >>> Birds in the Trailer Park
Craig Stapleton - President of Marsh & McLennan Real Estate Advisors, Inc.
From Identities of George Bush’s 115 Pioneers -
Each ‘Pioneer’ has raised at least $100,000 for Bush’s Presidential Campaign...
Craig & Dorothy Stapleton, Greenwich, CT - Executive, Marsh & McLennan Companies
- Contributions to Bush’s Gov. Races: $10,000.
* * *
April 6, 2001
Bush Nominates Ambassador
to the Czech Republic
WASHINGTON (AP) - President Bush on Friday nominated Craig Stapleton as
ambassador to the Czech Republic. . . .
Stapleton, of Greenwich, Conn. served on the Peace Corps board of directors under
Bush’s father when he was president.
Stapleton is president of Marsh and McLennan Real Estate Advisors, Inc.
A Democrat, Stapleton said in an interview he was a partner with Bush in the Texas
Rangers baseball team.
His wife, Dorothy, is a first cousin of Bush’s father, he said.
$ $ $
October 14, 2004
White House For Sale
CONTRIBUTORS AND PAYBACKS
Craig Stapleton worked in the White House of the first President Bush (who
appointed him to the Peace Corps board) and married the second President Bush’s
From 1982 until President George W. Bush nominated him as U.S. Ambassador to the
Czech Republic in 2001, Stapleton was president of Marsh & McLennan Real Estate
Advisors, the leasing unit of Marsh & McLennan Companies. Stapleton also invested
with Bush in the Texas Rangers ball team that made Bush a millionaire 15 times over.
Bush’s profits got a boost from the other partners, who gifted him extra equity in the deal,
and by local taxpayers, who paid $135 million for the team’s new stadium.
When the hospitality division of the Blackstone Group investment bank merged with CUC
International in 1997, CUC designated Stapleton as one of its directors on the board of
the new Cendant Corp. The following year, Cendant slashed its reported earnings over
the past three years by $650 million due to massive accounting fraud at CUC.
With Stapleton, ex-Defense Secretary William Cohen and ex-Canadian Prime Minister
Brian Mulroney on its board, Cendant then settled investor lawsuits for a record $3.1
That same year, Stapleton organized a 1998 Bush fundraiser that netted $250,000.
As the No. 1 stockholder in Vacu-dry Co., Stapleton joined other board members in June
1999 in a sudden decision to abandon its apple-drying business. The decision wiped out
276 plant jobs and blindsided Sonoma County apple growers....
Stapleton’s longtime employer owns Marsh Mercer Consulting Group and Putnam
Investments. After Massachusetts regulators issued subpoenas in 2003 to probe
allegations that Putnam gave special privileges to elite mutual fund investors, the
company fired 15 employees for personally profiting from rapid-fire, “market-timing”
trades in Putnam mutual funds and then fired Putnam CEO Lawrence Lasser.
In 2004, research firm Morningstar, Inc. ranked a college savings plan that Putnam
administers in Ohio as one of the five worst in the nation due to the excessive fees
that it reaps from these educational accounts.
Marsh & McLennan had almost $2.5 million in federal contracts in fiscal 2002, mostly
with the Treasury Department.
Gwendolyn S. King - A director of Marsh & McLennan Companies since 1998 and
member of President Bush’s Commission to Strengthen Social Security.
From MMC’s web site:
Director of Marsh & McLennan Companies since 1998. Ms. King, age 60, is president
of Podium Prose in Washington, D.C. She was senior vice president, corporate and
public affairs at Peco Energy from 1992 until 1998. From 1989 to 1992, she served as
commissioner of the Social Security Administration in the U.S. Department of Health and
Human Services. Ms. King is a director of Lockheed Martin Corporation, Monsanto
Company, Pharmacia Corporation and the National Association of Corporate Directors
and a member of the George Washington University Council on American Politics.
Jeffrey W. Greenberg - From Business Wire - 11/18/99 - The Board of Directors of
Marsh & McLennan Companies (MMC) today elected Jeffrey W. Greenberg CEO of
Mr. Greenberg who continues as president of MMC, succeeds A.J.C. Smith, age 65, who
will remain chairman of the board until he retires from the company at its 2000 annual
meeting. Mr. Smith will continue as a member of the company’s board.
Mr. Greenberg, age 48, was elected president of MMC in January 1999, at the same time
his planned succession to the CEO position was announced....
Mr. Greenberg began his professional career in 1976 at MMC, where he managed the
commercial aviation/aerospace insurance group. He then worked for 17 years at
American International Group . . . He rejoined MMC in 1995 and was named chairman
and chief executive officer of Marsh & McLennan Capital in 1996....
Jeffrey Greenberg is the son of American International Group head Maurice (Hank)
$ $ $
October 15, 2004
NY Insurance Probe Casts Light
On Greenberg Family
By Joseph A. Giannone, Reuters
NEW YORK - New York Attorney General Eliot Spitzer’s far-reaching probe into price-fixing and kickbacks in the insurance industry has cast a spotlight on three members of
one family who control almost a trillion dollars in assets.
Spitzer, who prompted reforms in stock research and mutual funds, announced a lawsuit
on Thursday against Marsh & McLennan Cos. The Boston-based company, led by
Chairman and Chief Executive Jeffrey Greenberg, were accused of price-fixing and
misleading clients by accepting payments to steer business to certain providers.
Among the insurers implicated in the suit were American International Group Inc (AIG),
the global insurance giant and largest U.S. insurer led by Maurice “Hank” Greenberg,
Jeffrey’s father, and ACE Ltd., the big Bermuda-based insurer led by Jeffrey’s brother
An investigator in Spitzer’s office told Reuters that the presence of three Greenbergs in
the probe, while “interesting and piquant”, is purely coincidental.
Still, the fact that three Greenbergs run insurance companies controlling more than $700
billion in assets can be traced back to Hank Greenberg and his unshakable place at the
top of the industry.
People who have dealt with the 79-year-old have said he can be intimidating. Only the
second man to run the 85-year-old company founded in China, Greenberg is famous for
keeping tight control over every aspect of the far-flung operation....
Through the 1990s, analysts and investors expected Hank to turn the reins over to his
oldest son Jeffrey, now 53. But in the space of five years both Jeffrey and Evan quit AIG
to join rival insurance companies.
Jeffrey landed at Marsh & McLennan in 1995, ready to start an independent career
after 17 years in Hank’s shadow. His rise to the top of a company had been smooth until
the past two years, when Marsh & McLennan’s three divisions – Putnam Investments,
Mercer Inc. and now insurance broker Marsh – all came under fire from Spitzer.
Five years later Evan, now 49, also quit AIG as president and chief operating officer even
after his father publicly affirmed him as the heir apparent. Evan set up shop at rival Ace
to start his own legacy. In March this year he was named chief executive.
But now the family will need to brace itself for dealing with Spitzer, who on Thursday
vowed to pursue the investigation beyond Marsh & McLennan to other companies and
across the entire insurance industry.
Spitzer also made it clear he wants changes inside Marsh & McLennan’s executive
In a press conference on Thursday, Spitzer directed this comment to Marsh’s board of
“I would suggest that you should think long and hard – think very long and very
hard – about the leadership of your company.”
* * *
[A Catbird Note: It was during Greenberg’s tenure with American International Group
(AIG) that Bill Clinton’s “personal piggybank,” Arkansas Development & Finance
Authority, did millions of dollars in questionable deals with AIG, including helping finance
the formation of Coral Reinsurance Company in Barbados.]
* * *
For more, GO TO >>> The Un-American Insurance Company
John Sinnott - Chairman and CEO of Marsh, Inc.
October 1, 2002
Marsh Chairman & CEO to Step Down in 2003
Marsh & McLennan Companies, Inc. (MMC) announced that John Sinnott, chairman
and CEO of Marsh Inc., the company's risk and insurance services business, will retire
from the firm in July 2003.
Ray Groves, president and COO of Marsh Inc., will succeed Sinnott as CEO in January
and as chairman in July 2003.
Jeffrey Greenberg, chairman of MMC, noted, "Jack Sinnott's leadership of Marsh has
been extraordinary. He guided the firm through the difficult operating environment in the
1990s, the successful consolidation of two large mergers, the September 11 attacks and
their aftermath, and the changing marketplace for commercial insurance. I'm pleased that
Jack will continue as a special advisor to MMC after he retires in July."
Sinnott joined Marsh & McLennan in 1963 and has held various executive positions with
the company during his career....
For more, GO TO > > > Harmon’s Claim Letter to John Sinnott; Claims By Harmon
Lawrence Lasser - Putnam Investments’ ousted CEO.
November 5, 2003
Ousted CEO May Get Millions
Putnam’s former leader could receive more than
$32.7 million under an employment agreement
By Aaron Pressman, Bloomberg News
Putnam Investments’ former chief executive officer, Lawrence Lasser, who was the
second-highest-paid executive at a publicly traded mutual-fund company, may be owed
more than $32.7 million after Monday’s ouster amid fraud charges against the company
he ran for 18 years.
Lasser, who was paid $163 million over the last six years, signed an employment
agreement with Putnam in 1997 that included $15 million due when he retired, according
to filings with the Securities and Exchange Commission. An amendment to the plan
signed in 2000 created an additional $16.7 million payout due when the agreement
expired at the end of 2005.
Lasser, 61, was forced out in the industry-wide probe of improper trading. The SEC and
Massachusetts regulators have alleged that Putnam failed to prevent two former money
managers from taking advantage of inside knowledge about the international funds they
oversaw to generate quick profits for themselves at the expense of clients.
Marsh & McLennan spokeswoman Barbara Perlmutter said the company, Putnam’s
parent, was reviewing Lasser’s contract to determine what was owed.
Lasser earned about five times the amount paid to his boss, Jeffrey Greenberg, the
chairman and CEO of Marsh & McLennan, during the last six years. Lasser declined to
comment, according to Putnam spokeswoman Nancy Fisher.
Lasser has been replaced by Charles Haldeman Jr., 55, of Haverford, Pa., Putnam’s co-head of investments.
June 11, 2004
Lasser: Settles For $80M From Putnam
By Sophia Banay, Forbes
Lawrence Lasser, an ex-chief executive at Putnam Investments, settled with his former
employer for almost $80 million as arbitration proceedings come to a close.
After heading up the mutual fund company for 18 years, Lasser lost his job last
November in the wake of an improper fund trading scandal which resulted in the
departure of several other executives.
The $80 million figure was $25 million less than the compensation package Lasser
had hoped for.
The sum was disclosed by Marsh & McLennan, Putnam’s parent company, in a
regulatory filing on Thursday, in which the company claimed the payout would not have “a
significant impact” on earnings.
Ray J. Groves - Incoming chairman and CEO of Marsh, Inc.; director of American
Water Works Company, Inc., Boston Scientific Corp and Gillette Co.; former director of
Allegheny Technologies, Inc.
October 2, 2002
MARSH CHAIRMAN & CEO JOHN T. SINNOTT
TO RETIRE IN 2003
Marsh & McLennan Companies, Inc. (MMC) announced today that John T. Sinnott,
chairman and chief executive officer of Marsh Inc., the company's risk and insurance
services business, will retire from the firm in July 2003.
Ray J. Groves, president and chief operating officer of Marsh Inc., will succeed Mr.
Sinnott as chief executive officer in January and as chairman in July 2003....
Commenting on Mr. Groves' appointment, Mr. (Jeffrey) Greenberg said, "Marsh has a
deep bench of management talent, and the firm is especially fortunate to have an
executive as skilled and experienced as Ray Groves to succeed Jack. Ray has a
longstanding relationship with MMC and a profound understanding of professional
Mr. Groves has been a member of MMC's Board of Directors since 1994, when he retired
from Ernst & Young after serving 17 years as chairman and chief executive officer. He
joined MMC's management team as a senior advisor in August 2001 and was appointed
president and chief operating officer of Marsh Inc. in October 2001....
Source: Marsh & McLennan Companies, Website: www.marshmac.com
For more on American Water Works, GO TO > > > Blue Gold
For more on Ernst & Young, GO TO > > > P-s-s-t, wanna buy a good audit?
Seabury & Smith - The manager for Marsh Affinity Group Services.
We work hand-in-hand with our client organizations to create solutions to meet their
members' specific insurance needs. You know your members and, with a 50-year-plus
history in the insurance management industry, we know how to best support them.
Marsh Affinity Group Services specializes in the design, administration and marketing
of custom insurance programs and financial planning services for client organizations and
Through our family ties with Marsh & McLennan Companies, our history goes back to
In 1905, Burrows, Marsh and McLennan was formed in Chicago.
The name was changed to Marsh & McLennan in 1906 after founders Henry W. Marsh
and Donald R. McLennan.
In 1949 the Seabury & Smith organization was formed. It was named after two former
Marsh & McLennan chairmen, Charles W. Seabury and Hermon D. Smith.
Albert H. Wohlers was founded in 1949 to specialize in the direct response/mass
marketing group insurance and their members. It was acquired by Seabury & Smith, Inc.
In 1949, Maginnis & Associates was formed and committed its efforts to marketing
insurance plans through association sponsorships in the health care industry. It was
acquired by Seabury & Smith, Inc. in 1998.
Headquartered in NYC, we have recently expanded our sales and service offices to
Chicago and Park Ridge, Illinois through our acquisitions of Maginnis & Associates and
Albert H. Wohlers.
These are in addition to our offices in Alexandria, Virginia; Brookfield, Wisconsin;
Columbia, South Carolina; Dallas, Texas; Des Moines, Iowa; Ft. Washington,
Pennsylvania; Honolulu, Hawaii; Minneapolis, Minnesota; Perry, Iowa; Phoenix, Arizona;
St. Louis, Missouri; San Francisco, California; Seattle, Washington and Washington,
* * *
Welcome to The State Bar of California
Approved Lawyers Professional Liability
It has never been easier to apply!
With our new, simplified application ... most applicants can complete the process in less
than five minutes and get an actual quote, not just an estimate.
Marsh Affinity Group Services
160 Spear Street, 15th Floor
San Francisco, CA 94105
A service of Seabury & Smith, Inc., an MMC company.
~ ~ ~
For more, GO TO > > > Claims By Harmon
Stephen Friedman - a senior principal of Marsh & McLennan Capital, Inc.
In 1994, Mr. Friedman retired as chairman of Goldman, Sachs & Co. He was co-chairman or sole chairman from 1990-1994, and from 1987-1990 he served as co-chief
operating officer. He joined Goldman, Sachs in 1966 having previously held a position as
a law clerk to a federal district court judge and as an attorney in New York City (1963-1966).
Mr. Friedman holds a B.A. from Cornell University (1959) and an LL.B. (Law Review)
from Columbia Law School (1962). He is a Trustee of Columbia University (Chairman,
Board of Trustees); Chairman of the Executive Committee of The Brookings Institution;
Trustee of Memorial Sloan-Kettering Cancer Center and member of the Executive
He serves as a director of: Fannie Mae, Wal-Mart Stores, Inc., the National Bureau of
Economic Research and the Concord Coalition.
Mr. Friedman is also a member of the President’s Foreign Intelligence Advisory Board
and a director of In-Q-Tel, Inc. He is a former member of the Aspin/Brown Commission
on the Roles and Capabilities of the U.S. Intelligence Community and the Jeremiah
Panel on the National Reconnaissance Office.
* * *
STATEMENT BY WARREN B. RUDMAN,
CHAIRMAN OF THE PRESIDENT’S
FOREIGN INTELLIGENCE ADVISORY BOARD (PFIAB)
In response to the President’s request for the PFIAB to undertake a review of the security
and counterintelligence threat to the Department of Energy’s weapons labs, I am pleased
to announce that I have asked PFIAB Members Ms. Ann Caracristi and Dr. Sidney
Drell to join me on a special panel of the Board to conduct this inquiry. In addition, the
President (Clinton) recently has announced his intent to appoint Mr. Stephen Friedman
to the PFIAB, and I intend to ask Mr. Friedman to become a panel member immediately
upon his appointment.
Ms. Caracristi, as esteemed intelligence veteran, was Deputy Director of the National
Security Agency (NSA) from 1980 to 1982. . . . She currently serves on the Board of
Visitors of the Joint Military Intelligence College ans as a Consultant to the NSA Scientific
Board. Ms. Caracristi also sits on the Intelligence Oversight Board, a standing committee
of the PFIAB that advised the President on the legality of US foreign intelligence
Dr. Drell, a world-renowned physicist and arms control specialist, is Professor Emeritus
of Theoretical Physics at the Stanford University Linear Accelerator Center and a Senior
Fellow at the Hoover Institute, Stanford University....
Mr. Friedman, a highly-respected and successful businessman, was for years a General
Partner of Goldman, Sachs & Co., and retired as its Chairman in 1994. He is Chairman
of the Board of Trustees of Columbia University, Chairman of the Executive Committee of
the Brookings Institution, and a member of the Executive Committee of the Memorial
Sloan-Kettering Cancer Center.
Mr. Friedman served on the Commission of the Roles and Capabilities of the US
Intelligence Community and on the Jeremiah Panel, which reviewed the National
Reconnaissance Office. He currently is a Senior Principal of Marsh & McLennan
Capital, Inc. . . .
– For more on the ‘highly-respected’ Mr. Friedman, GO TO > > > The Stephen Friedman
Flock; Dirty Gold in Goldman Sachs?; The Secret Nests; WHO’s Guarding the Hen
Wayne Berman - A high-flying lobbyist.
From The Money Men: . . . You’ve probably never heard of Wayne Berman, Peter
Terpeluk, Beth Dozoretz, or Alan Solomont. But you should. Certainly anyone who
wants to be president or a member of Congress has. They are among the key people to
see in the powerful world of political solicitors. . . . Whoever these people blessed were
the candidates who had the best chances to become our next president. The ones they
rejected didn’t have any chance at all....
~ ~ ~
The wall of fund-raiser Wayne Berman’s office was papered with photos of himself glad-handing with virtually all of the big-name Republicans of the past two decades. As a
longtime lobbyist, Berman knew— and was liked and trusted by— everyone from Ronald
Reagan to Newt Gingrich and from George Bush to George W. Bush. They respected
him both for his political savvy and for his ability to raise money— as much or more
money, in fact, than almost anyone else in town.
It was no surprise, then, that a colleague of his, Scott Reed, interrupted my interview with
Berman one day to ask for a favor. Reed was a Washington player in his own right; he
had served as campaign manager for the 1996 Dole for President campaign. But
Berman had the access that Reed lacked. Reed was pushing a “technical” amendment
for a client that needed to be affixed to an appropriations bill that was on the verge of
completion in the Senate.
So Berman picked up the telephone and called the chairman of the Senate
Appropriations Committee, Ted Stevens of Alaska ... A half hour or so later, Stevens
called back. I didn’t hear everything that was said, but it was obvious that Berman’s
reminder was all that was needed to insert the amendment into the bill....
* * *
From Journal Inquirer, 3/6/00, by Don Michak:
Treasurer Scandal’s Tentacles
SOME KEY PLAYERS in Connecticut’s Paul Silvester scandal also are embroiled in a
controversy over conflicts of interest and political favoritism in Texas under the
governorship of Republican presidential candidate George W. Bush.
At the center of the controversy are hundreds of millions of dollars of investments by the
University of Texas Investment Management Co., or UTIMCO, a tax-exempt, quasi-public corporation said to be the brainchild of former University of Texas regent Thomas
O. Hicks, the Dallas merchant banker who served as UTIMCO’S first chairman....
In Texas, Donald I. Evans, finance chairman of the Bush presidential campaign, is a
Bush-appointed university regent, as is Tom Loeffler, a San Antonio lawyer and former
congressman. Evans is now chairman of the regents, who approved the creation of
UTIMCO in 1996.
Loeffler, one of Bush’s biggest financial backers in his 1988 gubernatorial race, also has
been a registered lobbyist for Hicks, Muse, Tate & Furst, and he joined Hicks on the
UTIMCO board in 1996.
Loeffler and several others involved in the UTIMCO controversy also are among the
people Bush calls his “pioneers,” supporters who each helped him raise at least $100,000
in presidential campaign contributions.
The group includes R. Steven Hicks, the brother of Thomas Hicks; three people whose
investment partnerships had received UTIMCO funds; two partners in the law firm that
counsels UTIMCO; and Wayne L Berman, a Washington lobbyist...
Last fall ... Berman, who is finance chairman of the national Republican Governors
Association, “voluntarily” suspended his activities on behalf of the Bush campaign,
pending the results of the continuing federal investigation of Silvester’s crimes in
Connecticut. . . .
Berman is a central figure in the Silvester scandal, having apparently “bundled” campaign
cash to Silvester, including a contribution from another big Republican fundraiser and his
co-chairman of the governors association’s Finance Committee, Washington lobbyist
Three of Berman’s colleagues, among Bush’s “pioneers” -- corporate chieftains Maurice
R. Greenberg of American International Group, Herbert Collins of Boston Capital
Partners, and Thomas Foley of ... NTC Group— also helped bankroll Silvester’s failed
And Berman hired both the former treasurer and his closest aide soon after Silvester’s
narrow 1998 election defeat. A survey of the treasury’s business partners last fall also
showed Berman to have collected $1.5 million in “finder’s fees” on two pension fund
deals he helped broker with Silvester....
The bulk of Berman’s fees— $1 million ... came from The Carlyle Group, a Washington
merchant bank run by several prominent Republicans in the Reagan and Bush
administrations, including former Secretary of Defense and CIA Deputy Director Frank
Calucci, Secretary of State James A. Baker, and Office of Management and Budget
Director Richard G. Darmon.
Former President Bush also advises one of Carlyle’s investment partnerships, and the
firm reportedly has paid him for speeches...
The UTIMCO controversy and the Silvester scandal also are both marked by the
involvement of corporate and legal elites whose Republican pedigrees trace back to the
The most obvious link is Thayer Capital Partners, an investment group headed by
Frederic V. Matek, the former head of personnel in the Nixon White House, deputy
director of Nixon’s Committee for the Re-election of the President, and president of
Marriott Hotels, Northwest Airlines, and Coldwell Banker Commercial Group. . . .
Silvester invested $75 million with Thayer, and UTIMCO initially approved a $20 million
commitment, but the Texans backed out of their deal...
In Connecticut the Carlyle payment to Berman amounted to 1 percent of Silvester’s $100
million investment in Carlyle European Partners. Thayer Equity Advisor IV LP, to which
Connecticut committed $75 million, arranged to pay Merrill Lynch & Co. $2 million and
North Cove Ventures, a company organized by former House Majority Leader William
DiBella, a Democratic power broker and confidant of Silvester’s, $374,500....
Meanwhile, Silvester, who last September pleaded guilty to racketeering and money
laundering as the key figure in the kickback scheme involving such fees, faces a federal
prison term of as much as six years.
The U.S. Securities and Exchange Commission also has launched a broad
investigation of the financial transactions that Silvester authorized during his 17-month
tenure as treasurer. Two months ago it sought records concerning his private-equity
investments as well as his hiring of investment managers and bond underwriters....
* * *
From The Governor’s Gusher: The Bush Profiteers - 100 Donors Who Enjoy Hands-Off, Handout Government...
42. Wayne Berman (Washington, DC): $16,000
Berman is a lobbyist and ex-GHWB assistant secretary of commerce. An ex-Connecticut
state treasurer recently pled guilty to corruption charges involving politicians and lobbyists
who took “finder’s fees” from firms to which he gave contracts to manage state pension
funds. Berman reportedly landed a $900,000 fee and hired the corrupt ex-treasurer as a
After reports of this scandal, Berman has reportedly suspended Pioneer fundraising, but
the GWB campaign has not returned the $100,000 or more he raised....
For more, GO TO > > > A Connecticut Yankee in King Kamehameha’s Court; Aloha,
Harken Energy!; Birds in the Lobby
# # #
FOR MORE MARSH BIRDS
A CONNECTICUT YANKEE IN KING KAMEHAMEHA’S COURT
ACE UP THE SLEEVE
ALOHA HARKEN ENERGY
ALLIED WORLD ASSURANCE
CONSECO: BIRDS IN THE TRAILER PARK
THE CARLYLE GROUP: BIRDS THAT DRINK FROM CESSPOOLS
THE BANKRUPTCY BUZZARDS
THE BLACKSTONE GROUP
BROKEN TRUST: THE BOOK
BUZZARDS IN THE BANK OF HAWAII
BUZZARDS OF PARADISE
CLAIMS BY HARMON
CONFESSIONS OF A WHISTLEBLOWER
DIRTY GOLD IN GOLDMAN SACHS
DIRTY MONEY, DIRTY POLITICS & BISHOP ESTATE
HARMON’S CLAIM LETTER TO JOHN SINNOTT
HARMON’S LETTERS TO INSURANCE COMMISSIONERS
KROLL, THE CONSPIRATOR
MARSH & McLENNAN: THE MARSH BIRDS
MARSH & McLENNAN’S TRIDENT FUNDS
OFFICE OF THE U.S. TRUSTEE vs HARMON
RICO IN PARADISE
THE CHUBB GROUP
THE DISSECTION OF FRISTY
THE GREAT NEST EGG ROBBERIES
THE HARMON ARBITRATION
THE PRUDENTIAL: A NEST ON SHAKY GROUND
THE STEPHEN FRIEDMAN FLOCK
THE STORY OF ENRON
THE EAGLE HOODED
THE POOP ON AON
THE ROYAL & SUN ALLIANCE
THE SECRET NESTS
THE WILLIS GROUP
TRACKING THE TITAN
TRANSYLVANIA TRAVELERS IN ST. PAUL
VAMPIRES IN THE CITY
ZEROING IN ON ZURICH FINANCIAL SERVICES
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MORE OF THE CATBIRD’S FAVORITE LINKS
THE CATBIRD SEAT FORUM
THE CATBIRD SEAT
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Last Update March 31, 2009, by The Catbird