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Last Updated: Tuesday, 26 October, 2004, 22:55 GMT 23:55 UK
Marsh to escape criminal charges
NY Attorney General Eliot Spitzer reads from a copy of emails from the insurance brokerage firm Marsh & McLennan
Eliot Spitzer says Marsh will not face criminal charges
US insurance broker Marsh & McLennan looks set to escape criminal charges after it announced a wide-ranging reform of the way it does business.

It will still face civil charges from New York Attorney General Eliot Spitzer's office.

Mr Spitzer had accused the firm of taking illegal payments for steering clients to favoured insurers.

With the resignation of chief Jeffrey Greenberg on Monday, Marsh hopes to distance itself from the charges.

The company has announced that it will stop taking a specific type of commission from insurers.

Insurance companies pay fees - described as "contingent compensation" - to brokers in exchange for getting more business. These fees are central to Mr Spitzer's civil case against Marsh.

Greater transparency

As part of the reforms that will come into effect by 1 January next year, Marsh pledged to provide greater transparency to its clients on the deals it does with insurers.

We are demonstrating our commitment to our clients and the markets and taking a leadership position in industry reform
Michael Cherkasky, Marsh CEO

Clients will receive an account of Marsh's revenues and the firm will insist insurance companies show commission rates on all policies.

Marsh chief executive Mr Greenberg resigned on Monday to be replaced by Michael Cherkasky, currently head of the firm's risk and insurance services unit.

"In introducing these significant industry-leading changes, we are demonstrating our commitment to our clients and the markets and taking a leadership position in industry reform," said Mr Cherkasky.

The reforms unveiled so far appear to have won favour with Mr Spitzer.

"The actions announced today by the Board of Directors of Marsh & McLennan permits Marsh and this office to move forward toward a civil resolution of our lawsuit," he said.

The news helped shares in Marsh, which had fallen by 43% since Mr Spitzer announced his lawsuit on 14 October, rise on Wall Street, where they closed up 9.27%.

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