Marsh retrenches 3,000 in response to Spitzer

Global brokers Marsh and McLennan Cos. Inc. plans on slashing 3,000 employees, equal to about 5% of its total workforce, in response to an investigation into the company by New York’s attorney general Elliot Spitzer regarding alleged business "bid rigging". The Marsh charges relate to a broader investigation undertaken by Spitzer of the insurance industry and the practice of broker contingency fee arrangements.The announcement of the staff cut at Marsh follows the resignation of several key senior directors, including Marsh Inc.’s president Roger Egan and Christopher Treanor, the chairman of the firm’s global placement business. Marsh also revealed that it had reached a US$40 million settlement with the Securities and Exchange Commission (SEC) regarding "questionable brokerage allocation practices" at its asset management operation, Putnam.The bulk of the workforce cut will take place in Marsh’s risk and insurance business under Marsh and McLennan. And, on the back of lower than expected third quarter earnings, the company says it will incur restructuring charges of about US325 million over the next six months. "This has been a difficult time for the company," Marsh’s CEO Michael Cherkasky comments in a statement following the announcement of the planned staff cut.