When insurance broker Marsh & McLennan came under investigation for bid rigging in 2004, its share price lost half its value. Now, some investors in the company will get some of their money back.

The company announced today it will pay $400 million to settle a lawsuit, led by pension funds in New Jersey and Ohio. The firm earlier negotiated an $850 million settlement with the State of New York, which brought the first case.

Ohio Attorney General Richard Cordray says today's settlement holds Marsh accountable for its wrongdoing and requires the company to compensate investors for their injuries.

"Through violations of securities laws, Marsh harmed the investments and retirement benefits of workers in Ohio and across the country," Cordray said. "This massive fraud was built on unethical and illegal practices and violated the best interests of clients and shareholders alike."

The Public Employees Retirement System of Ohio, the State Teachers Retirement System of Ohio and the Ohio Bureau of Workers' Compensation, together with the State of New Jersey Department of Treasury, Division of Investments, have served as lead plaintiffs representing shareholders in the case.

Investors harmed

Marsh is one of the world's largest providers of insurance brokerage and consulting services. In the lawsuit against Marsh, the lead plaintiffs sought redress for investors who were harmed by Marsh's failure to disclose an alleged scheme that generated substantial earnings from illegal, anticompetitive arrangements with insurance carriers.

The alleged scheme involved steering business to certain insurance carriers in exchange for kickbacks known as "contingent commissions." According to the complaint, in some instances Marsh even generated fake bids to shield participating insurance carriers from competition. The alleged scheme violated numerous laws.

In 2005 Marsh & McLennan agreed to pay $850 million in restitution to policyholders harmed by its actions and adopt a new business model that avoids similar conflicts of interest.

According to the original complaint, filed by then-New York Attorney General Elliott Spitzer, Marsh collected approximately $800 million in contingent commissions in 2003. The complaint alleged that those commissions were tainted by conflicts that harmed Marsh's customers -- large corporations, small and mid-size busineses, municipal governments, school districts and some individuals.

Cordray says Marsh never revealed this scheme to the investing public, despite the huge role contingent commissions played in the company's earnings. Marsh's improper business practices came to light in October 2004 after Spitzer's investigation revealed an industry-wide scandal involving price-fixing and improper bid manipulation activities.

Within days of that news, Marsh & McLennan Companies lost $9 billion in market capital as its stock price collapsed. Shareholders, including many in Ohio, suffered tremendously, Cordray said.