Pru retail brokerage settles charges over mutual fund pricing

Unit to pay nearly $11M to close Finra action; B-D platform allegedly failed to place orders in a timely fashion

Dec 26, 2012 @ 3:33 pm

By Liz Skinner

Pruco Securities LLC will pay more than $10.7 million to customers who placed orders for mutual fund shares via facsimile or through the mail and allegedly received inferior pricing over a seven-year period.

The Financial Industry Regulatory Authority Inc. said Pruco, part of Prudential Financial Inc., priced more than 850,000 paper orders from late 2003 through June 2011 one or two days after they were received. The orders, which were handled by a Pruco retail brokerage platform called Command, should have been priced on the day the orders were received as long as it was before 4 p.m.

Newark, N.J.-based Pruco also will pay a $550,000 fine for pricing errors and for having inadequate supervisory systems and procedures, Finra said.

“Pruco's inadequate supervision and pricing system resulted in thousands of customers receiving inferior prices for more than seven years,” said Brad Bennett, Finra's enforcement chief. “Broker-dealers must ensure that their systems provide customers with accurate pricing for all products that the firms offer.”

Employees at Command mistakenly thought they could use “best efforts,” or up to two business days, to process these funds orders, Finra said. About 37,000 accounts for 34,000 customers will receive restitution, plus interest. The company is still calculating restitution for about 3,240 additional customers who will get money back after Pruco finishes its pricing review.

Apparently, Pruco discovered the pricing issue after Command personnel were asked about a fax order that wasn't executed until the day after it was received. Finra said it took into consideration that the firm reported the pricing issue to the regulators and has already made changes to its policies and procedures.

Prudential spokesman Bob DeFillippo said that after the company discovered the pricing delay and reported it to Finra, it also moved quickly to make sure it couldn't happen again, and to identify customers who deserve restitution.

“The errors were not always in our favor, but of course we're not trying to recover anything,” Mr. DeFillippo said. “Our intent is to make sure anyone harmed is made whole, plus interest.”

0
Comments

What do you think?

View comments

Recommended for you

Sponsored financial news

Featured video

INTV

Why some retirement plan advisers think Fidelity is invading their turf

InvestmentNews editor Frederick P. Gabriel Jr. and reporter Greg Iacurci talk about this week's cover story that looks at whether Fidelity Investments is stepping on the toes of retirement plan advisers.

Latest news & opinion

Advisers bemoan LPL's technology platform change

Those in a private LinkedIn chat room were sounding off about fears the independent broker-dealer will require a move to ClientWorks before it is fully ready.

Speculation mounts on whether others will follow UBS' latest move to prevent brokers from leaving

UBS brokers must sign a 12-month non-solicit agreement if they want their 2017 bonuses.

Maryland jumps into fiduciary fray with legislation requiring brokers to act in best interests of clients

Legislation requires brokers to act in the best interests of clients.

8 apps advisers love for getting stuff done

Smartphone apps that advisers are using in 2018 to run their business more efficiently.

Galvin's DOL fiduciary rule enforcement triggers industry plea for court decision

Plaintiffs warned the Fifth Circuit that Massachusetts' move against Scottrade signaled that the partially implemented regulation can raise costs for financial firms.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print