In Abrupt Reversal, N.J. Agrees to Join Prudential Settlement

NEW YORK — After saying earlier this week that they were indefinitely postponing a settlement with Prudential Securities, New Jersey officials abruptly reversed themselves Friday and signed the accord.

A. Jared Silverman, chief of the state’s Bureau of Securities, had said Wednesday that the delay would give the agency time to investigate possible wrongdoing by the brokerage’s parent company, Newark-based Prudential Insurance Co.

But Silverman said Friday that he decided to sign the multi-state accord following more than six hours of intensive meetings with Prudential lawyers over the last two days.

He said Prudential had provided him with answers to questions about the parent company’s role in its brokerage’s sales of limited partnership interests.

Silverman also said Prudential’s lawyers agreed to minor modifications of the settlement, giving the state more authority to monitor how Prudential deals with customers who have filed claims against the company.

In October, the Securities and Exchange Commission and 49 states, including New Jersey, agreed to a settlement under which Prudential Securities would pay at least $371 million in penalties and restitution to customers. The case stemmed from charges of widespread fraud against customers, especially through a program that sold about $8 billion in limited partnerships in the 1980s.

Silverman had said the state needed more time to look into allegations that Prudential’s insurance agents sold limited partnership interests even though many were not licensed to do so.

But he said Friday that a survey of 180 New Jersey residents who had bought partnership interests found that none had bought them from insurance agents. He said Prudential had also satisfactorily answered questions about properties sold by the parent company to the limited partnerships.

“As a result of information provided by Prudential, the bureau feels there is no basis for further action at this time,” Silverman said in a statement.