Three former Marsh Inc executives were acquitted on Monday of criminal charges in a bid-rigging and price-fixing scheme in which they were accused of colluding to steer clients to favored insurers.

Joseph Peiser, who led Marsh's excess casualty unit, and brokerage executives Greg Doherty and Kathleen Drake were found not guilty by Justice James Yates of the New York State Supreme Court in Manhattan of scheming to defraud and antitrust charges, lawyers for Peiser and Drake said.

The defendants were among eight former Marsh executives indicted in September 2005 as part of a price-fixing probe conducted by Eliot Spitzer, then the attorney general of New York.

Spitzer accused the executives of colluding with American International Group Inc , units of Ace Ltd and Zurich Financial Services AG , Liberty International Insurance Co and other companies to rig the market for excess casualty insurance from November 1998 to September 2004.

The indictments came after Marsh's parent, New York-based Marsh & McLennan Cos , agreed in January 2005 to pay $850 million to settle related civil charges by Spitzer.

Marsh & McLennan did not face criminal sanctions, and did not admit wrongdoing in settling the civil charges. Peiser and Drake were managing directors at Marsh, while Doherty was a senior vice president, Spitzer had said. Yates heard their case without a jury.

Peiser should never have been charged, said his lawyer Jerry Bernstein, a partner at Blank Rome LLP in New York. Just because he was head of global broking in North America, and because some people at Marsh may have done some bad things, does not mean he was guilty.

Peter Driscoll, a partner at Driscoll & Redlich in New York who represented Drake, said his client devoted her life to Marsh. She thought she hadn't done anything wrong, and that the verdict is what would happen.

A spokeswoman for New York Attorney General Andrew Cuomo, whose office took over the case, did not immediately return a call for comment.

A lawyer for Doherty did not immediately return a call for comment.

Yates in February 2008 found two other former Marsh managing directors, William Gilman and Edward McNenney, guilty on an antitrust charge in the case, though they were acquitted on other charges.

Bernstein said Peiser intends to return to the insurance industry, after having done some consulting work while the case was pending.

Driscoll said he did not know Drake's plans.

The case is: New York v. Doherty et al., New York State Supreme Court, County of New York.

(Reporting by Jonathan Stempel; Editing by Leslie Gevirtz, Phil Berlowitz)

New York