Prudential Financial, Inc.

The SEC charged two Prudential Financial subsidiaries, AST Investment Services and PGIM Investments, with failing to disclose conflicts of interest and making misleading disclosures to boards of 94 mutual funds they advised. The SEC found that funds were reorganized in 2006 in a way that generated tax benefits for Prudential but imposed costs on the funds. From approximately July 2005 through November 2015, the advisers caused funds to recall securities that had been loaned out so Prudential could increase tax benefits. The recalls caused the funds to lose tens of millions of dollars in securities-lending income. The SEC found that the conflict between Prudential's tax benefits and the funds' financial interests was not properly disclosed. The reorganization also subjected funds to less favorable foreign tax treatment, and Prudential did not timely reimburse losses despite assurances that it would do so. The subsidiaries self-reported the conduct and voluntarily reimbursed the funds more than $155 million. The SEC required an additional $27.6 million in disgorgement and imposed a $5 million civil penalty. Primary source: SEC — Prudential Subsidiaries Charged for Misleading Funds: https://www.sec.gov/newsroom/press-releases/2019-176