A Prudential Insurance Co. of America unit Thursday agreed to pay a $20-million regulatory fine to settle a deceptive sales practices case that already caused the nation's largest life insurer to set aside $2.6 billion to settle private claims.
Prudential's broker-dealer unit, Pruco Securities Corp., was fined $20 million for violating securities laws, the NASD Regulation self-regulatory organization said. Among other things, Prudential salespeople persuaded holders of variable life insurance policies to replace the policies with more expensive ones from 1982 to 1995, NASD said.
Prudential, which neither admitted nor denied the allegations, said it was glad to settle the long-running case.
The NASD fine is paltry compared with the billions of dollars that Newark, N.J.-based Prudential is paying to holders of the affected regular and variable life insurance policies--policies that invest part of the premium in bonds or stocks.
The company set up a $2.6-billion reserve to settle claims from 650,000 policyholders under a 1997 settlement. The company last month said that it had paid $1 billion to settle two-fifths of the claims, and that it expected to wrap up the process this year.
The settlement also requires Pruco to hire an outside consultant to review the company's current procedures for selling life insurance.