Pru Securities will notify clients officially of the details in January. Those who can’t wait can learn more by calling 800-220-9125. Claims must be filed within one year. If the company refuses to pay, an arbitrator will step in. No lawyers are required, and the settlement fund will not pay legal fees.
The settlement is the latest blow to the Prudential Insurance Co. of America, which acquired Bache Group in 1981 as a way to sell stocks and bonds to its 12 million policyholders. Instead of generating synergies, the Wall Street firm has bought nothing but trouble. Last week’s agreement still doesn’t cure Pru Securities’ hangover. Some $10 million of the fine covers Securities and Exchange Commission charges that brokers in nine different offices boosted their commissions by excessive stock and option trading in customers’ accounts. Those cases aren’t covered by the fund and the arbitration agreement. “The issue of recovery by individual investors is left to the investors,” says SEC enforcement chief William McLucas. Pru Securities says its “new management,” installed after the ouster of George L. Ball in 1991, wants badly to clear up the problems. Regaining credibility won’t be easy: the SEC contends that the unauthorized trading went on until 1992.
