Prudential Pays $32.6 Million to Settle Probe of Mutual-Fund Business

By Dave Michaels 

WASHINGTON -- Prudential Financial Inc. agreed to pay $32.6 million to settle claims that it didn't disclose how a reorganization of its mutual-fund business would cost the funds millions in lost interest income.

The Securities and Exchange Commission on Monday said the 2006 reorganization -- intended to engineer tax benefits for Prudential -- created a conflict of interest because the company benefited while the funds lost income from securities lending. They also paid higher taxes in certain foreign jurisdictions. In addition to paying the fines, Prudential reimbursed over $155 million to the funds, the SEC said in a settlement announcement.

Prudential neither admitted nor denied the claims. A company spokesman didn't immediately respond to a request for comment.

"Investment advisers must be vigilant in monitoring for conflicts related to actions taken by affiliates, and must act consistently with their representations to their clients," said Dabney O'Riordan, co-chief of the SEC's asset-management unit in its enforcement division. Prudential's subsidiaries "acted to benefit their parent company despite the costs those acts imposed on their clients."

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(END) Dow Jones Newswires

September 16, 2019 16:28 ET (20:28 GMT)

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