Spitzer Not Handing Probes Over To Feds

The story quoted Mr. Spitzer as saying he was moving away from his high-profile investigations of financial services–which currently targets the insurance industry and its alleged abuses surrounding contingent fee commissions. The article indicated that he was making the move for political expedience as he prepares to run for the state's governorship in 2006. (The New York Times printed a correction in its Dec. 26 edition.)

In a statement, Mr. Spitzer said he believes that aside from the U.S. Securities and Exchange Commission, the current administration is not doing an adequate job of "protecting consumers and the environment."

He said his office plans to continue its probes, adding that "several significant developments will occur early in the new year that will again demonstrate" that his office remains in the forefront of protecting the interests of investors and consumers.

In an earlier interview, Mr. Spitzer said his investigations of the insurance industry aim to ensure the integrity of the broker?client relationship while working not to cause serious disruptions in the insurance markets.

In a Bloomberg television interview, Mr. Spitzer said "there is nothing theoretically wrong or illegal about a contingent payment," so long as there is adequate disclosure and the decision making is not tainted by the fees. However, he added that his office found "lack of disclosure and massive steering" of business based on the opportunity to cash-in on lucrative contingency fee deals.

"Bid-rigging is a real problem and it's straight-out felonious. It's criminal. People will go to jail for it," he said in comments taken from a transcript of the Dec. 17 interview obtained by National Underwriter.

However, he said he realizes how important the insurance industry is to the economy, and is striving to ensure stability while pressing his investigations. He said the best outcome would be a settlement with targeted brokers that would rectify the problems and resolve all issues for the future.

Discussing actions taken by his office against Marsh & McLennan Companies, he said he forced Jeffrey Greenberg, the company's chairman and chief executive officer, as well as others to resign because he had lost "confidence" in MMC's senior management.

When Mr. Spitzer announced his litigation in October, suing New York-based MMC for bid-rigging, steering of insurance contracts and other alleged contract placement abuses, he emphatically announced he would not negotiate with the management of the company at the time. This lead to the ouster of MMC CEO Jeffrey Greenburg and others.

Outside of MMC, he said, other chief executives for both brokerages and carriers have been very cooperative and are showing willingness to admit mistakes and correct problems.

Regarding Chicago-based insurance broker Aon, Mr. Spitzer said the fact that Patrick Ryan, Aon's chairman and chief executive officer, is stepping down as CEO has nothing to do with his ongoing investigation. He said Aon has been very cooperative and complimented Mr. Ryan on his integrity.

Mr. Ryan sparked a mild controversy after making a statement during a recent interview that his company had committed no wrongdoing. He quickly put out a statement after the interview appeared, saying in its own investigation the firm had indeed found instances of wrongdoing without offering details.

Mr. Spitzer said Mr. Ryan contacted his office shortly after the first comments appeared to say he did not mean to say there were no problems at Aon.

"I have nothing but good words to say about Pay Ryan individually," Mr. Spitzer said, according to the transcript.