The New York Times has an update on the MMC saga that references a recent 8-K filing by the company. (By the way, is there a single class at Williams that assigns even one 10-K, 10-Q or 8-K in its reading list?)

The Marsh & McLennan Companies, the world’s largest insurance broker, said yesterday that the Securities and Exchange Commission had begun a formal investigation into investments by its executives and directors in partnerships set up by the company.

Marsh, which was accused of bid-rigging and steering of business in a lawsuit filed by the New York attorney general in October, said that the commission had requested documents and other information about “related-party transactions” in which directors, executives, or large Marsh shareholders acquired a material interest. The transactions included dealings with the company’s Trident funds, the filing says.

We covered this story back in October. I’ll stick with my prediction from then. Although several then-members of the board of directors of MMC should be very worried about this development, Morty is extremely unlikely to be one of them. He is way too smart to have gotten involved with this.

For those who care, MMC (the stock) has bounced back significantly from its October lows. Once the new management settles with Spitzer, the scandal should fade away.

One of the last remaining questions concerns what the non-executive members of the board, like Morty, will or should do once a settlement is complete. By all accounts, the board, as a group, has done a pathetic job over the last 4 years. Other boards (e.g., Worldcom, NYSE, Enron) involved in similar scandals did the honorable thing by first, saving the organization by bringing on new management and, second, resigning as a group so that an untainted board could then take over.

Whether or not the board of MMC will or should resign is an open question.

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