'Spitzer risk' a threat to unruly firms
NEW YORK – "Spitzer risk," said one risk management executive at a recent conference in London, "is one of the most terrifying risks financial services firms face today." And the risks to firms of falling under the beam of New York attorney general Eliot Spitzer's regulatory spotlight are growing. The latest 'victim' is Marsh & McLennan, an insurance broker now being sued by Spitzer for rigging insurance bids and taking kick-backs from insurance firms.
The announcement of a lawsuit by Spitzer wiped 42% off Marsh's stock market value, and has resulted in the sacking of several top executives, including the chief executive officer. Legal costs, according to Wall Street analyst estimates, could reach $400 million in the next two years, while government fines and other penalties could reach $700 million or more. Aon and other insurers are accused of
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