Insurance brokerage and risk management company -- and Motley Fool Income Investor recommendation -- Arthur J. Gallagher (NYSE:AJG) had mixed news for investors last night. Third-quarter revenue increased 10%, and earnings rose 13%. Clouding that good news, though, was a subpoena from the Connecticut attorney general for information concerning possible violations of antitrust laws regarding solicitation of bids for insurance.

That news and a brokerage downgrade sent the stock tumbling 9% in early trading.

In a sternly worded press release, the company announced that it "will not participate as a retail broker in volume-based or profit-based contingent commission agreements effective January 1, 2005." These are two areas that are receiving attention because of New York Attorney General Eliot Spitzer's investigation of the largest insurance broker -- Marsh & McLennan (NYSE:MMC).

Also, the company announced that it hired independent legal counsel to perform an internal review when the Marsh news came to light. Good move. It allowed the company to say that its review, although at an early stage, had not identified any improper practices.

Without the investigation, Gallagher has a lot to like. Although organic growth in the brokerage segment declined in the most recent quarter, Gallagher has been growing rapidly through acquisitions. With net cash of more than $100 million and free cash flow approaching more than $250 million, the company has the money to grow and reward shareholders with a healthy 3.3% dividend.

The company sells for a modest 13 times current-year estimates -- but that's higher than the 10 times earnings that competitors Aon (NYSE:AOC) and Marsh garner.

Gallagher looks to be at a bargain price with a terrific dividend. But even after the company took definitive action to reduce its exposure to the business under investigation, it is too early to tell what may happen. When there are problems brewing that are front-page news, it is better to take a back seat and watch from the sidelines than to try to guess what may happen next.

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Fool contributor W.D. Crotty does not own stock in any of the companies mentioned.