‘Straight Talk’ Stutters Again : Securities: Prudential drops a second ad to head off embarrassment, but it defends campaign and says it will stick with it.
Two months ago, Prudential Securities launched its $20-million “straight talk” advertising campaign to try to resurrect the brokerage’s badly damaged reputation. Instead, the campaign appears to be backfiring.
For the second time, Prudential has taken the embarrassing step of withdrawing one of the ads after it ran.
The ad was yanked because it contained a false statement and because the Beverly Hills broker it features sold many limited partnership units--the products that tattered Prudential’s image in the first place, plunging the firm into a costly legal morass and costing small investors hundreds of millions of dollars.
The ad is a full-page photo of broker Susan B. Gooding, with a series of statements superimposed on her image: “From where I sit, preserving integrity is not a lost art,” says one. “Money can’t buy happiness, but it can buy sleep,” reads another.
The last statement: “One of my clients is my father.”
In fact, Gooding says her father died in December, 1991--and was never her client.
Prudential spokesman William J. Ahearn described the misstatement as a “typo,” saying Gooding had filled out a questionnaire listing her father-in-law as a client. Prudential’s marketing department misread her answer, he said.
Gooding, who had to tell her mother about the mistake, says she wishes Prudential executives had been more careful.
“I’m always honest and up-front with my customers and in everything I do,” Gooding said.
The ad appears in the April issue of Architectural Digest, a Los Angeles-based magazine with a circulation of 750,000. It was scheduled to run in many other publications, but Prudential canceled it. Ahearn said Prudential tried to stop the ad from running in Architectural Digest but was too late.
According to Ahearn, Prudential decided to pull the ad in part because Gooding “had sold some partnership interests herself, and we didn’t want to paint a bull’s-eye on her forehead.” The firm was concerned that the ad would invite lawsuits against Gooding, he said.
The review of the Gooding ad was sparked in February, when Prudential canceled a television commercial that was part of the same campaign.
The commercial featured Jeff Daggett, a broker in Prudential’s Downtown Los Angeles branch. “I try to recommend investments that won’t jeopardize my clients’ last years on the planet,” he said in the ad.
Prudential pulled the commercial after an 81-year-old Roman Catholic priest filed suit against Daggett and the firm. Msgr. Maximos Mardelli accused them of costing him his retirement nest egg by misleading him into investing heavily in limited partnerships. Daggett has denied any wrongdoing.
Prudential is under federal criminal investigation as a result of its sale of $8 billion in partnership units to some 400,000 investors, many of them retirees. The brokerage has settled civil securities fraud charges filed by the Securities and Exchange Commission. Without admitting or denying the charges, Prudential agreed to pay $41 million in fines and put at least $330 million into a fund to reimburse customers.
Despite the miscues, Prudential says it has no plans to withdraw the ad campaign, developed in conjunction with the brokerage by Deutsch Advertising in New York.
“We went out with a campaign we thought was right and we still think it’s right,” Ahearn said. Other ads in the campaign feature Prudential customers, Chief Executive Hardwick Simmons and other brokers.
John R. Perkins, Missouri’s securities commissioner, expressed incredulity Thursday that Prudential has had to withdraw a second ad.
“It’s one thing to have one of these occur, but to have it happen two times very clearly raises a concern about whether they (Prudential) really have changed,” he said.
In a separate development Thursday, California’s top securities regulator said the state expects to sign a long-delayed settlement with Prudential within 10 days. California has been the last holdout among the 50 states in settling state civil charges arising from the partnership fiasco.
Corporations Commissioner Gary S. Mendoza said his negotiations with Prudential will mean that California’s 42,000 limited partnership investors may receive about $30 million to $50 million more than they would have otherwise.
But Prudential sharply disputed those figures, saying investors nationwide will receive no more than $25 million extra as a result of an agreement about how partnership units still held by investors will be valued.
