Business and Politics Prudential Fined $20M For Deception

It is reported that Prudential Insurance Co of America was recently fined $20 million by the National Association of Securities Dealers, for misleading customers over a long period of time.

The investigators found that Prudential, one of the largest insurers in the country, had committed "serious violations of securities law and other rules" in the sale of variable life insurance policies, which are a combination of life insurance and investments similar to mutual funds.

Prudential had already paid more than $70 million in fines to state insurance regulators for widespread deception of customers. It also paid $1 million to federal authorities for allowing the destruction of sales documents, and it has set aside $ 2.6 billion for restitution to policy-holders nationwide. No other insurer has faced such heavy fines.

In concluding a two-year investigation of Prudential, the association issued a stronger and more detailed criticism of the company and its management than had state insurance regulators and it reported uncovering violations that other investigators had not addressed.

The association said that both Prudential agents and their supervisors failed to obtain licences required for the sale of securities, failed to submit sales literature to the association for review and either failed to take disciplinary actions against sales representatives or filed incomplete or inaccurate reports.