SEC Fines Prudential Units for Misleading Fund Boards
September 17, 2019 by Melanie Waddell
The Securities and Exchange Commission charged two subsidiaries of Prudential Financial Inc. on Monday with failing to disclose conflicts of interest and making misleading disclosures to the boards for 94 insurance-dedicated funds they advised.
The subsidiaries, AST Investment Services Inc. and PGIM Investments LLC (PI), served as investment advisors to the funds.
They were ordered to pay a civil monetary penalty of $5 million and disgorge $27.6 million, in addition to $155 million they have already voluntarily reimbursed.
In 2006, the funds were converted from being taxed as regulated investment companies (RICs) to partnerships for federal income tax purposes so that Prudential Financial and its affiliates could receive certain tax benefits; however, the benefits came with negative consequences to the funds, according to the SEC’s complaint.
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