Prudential Investment Management Services LLC, the broker-dealer unit of Prudential Financial Inc., Newark, N.J., will pay $1 million to settle claims that it provided incorrect information about investments, third-party ratings and historical communications to retirement plans and participants.
Prudential, "without admitting or denying the findings," agreed to the settlement with the Financial Industry Regulatory Authority, according to a Tuesday settlement document.
The agreement said Prudential accepted censure from FINRA. The settlement document — known as a letter of acceptance, waiver and consent — will become part of Prudential's "permanent disciplinary record and may be considered in any future action brought by FINRA or any other regulator against" Prudential Investment Management Services.
Prudential also agreed to hire an independent consultant to review compliance with FINRA's rules to correct the multiple violations. The consultant will file a report with the company and FINRA describing the necessary corrective actions.
According to the settlement document, FINRA said Prudential committed multiple violations of National Association of Securities Dealers rules. From January 2010 to June 2017, for example, Prudential provided inaccurate expense-ratio information and historical performance information about "numerous investment options" to defined contribution clients, the document said.
From October 2003 to December 2018, Prudential provided inaccurate third-party ratings for investment options in group variable annuities designed for retirement plans, the document said. From January 2004 to September 2019, the company provided incomplete information about money market funds, the document said.
During these periods of violations, Prudential "did not have supervisory systems or written supervisory procedures reasonably designed to achieve compliance with the content standards of FINRA's advertising rule by ensuring that its communications to customers about retirement plan investments and related investment options were accurate," the document said.
