Finra has fined Prudential Investment Management Services $1 million over allegations that it provided clients with erroneous information on certain retirement products, the industry’s self-regulator says.
During at least the period from January 2010 to June 2017, Prudential allegedly provided inaccurate expense ratio numbers and historical performance data to employer sponsors and employee participants in plans administered by its business unit on various investment products offered through a group variable annuity in defined contribution plans, according to a letter of acceptance, waiver and consent published by Finra.
Furthermore, from at least October 2003 to December 2018, Prudential allegedly served up inaccurate third-party ratings for investment products in retirement plan Group VAs, the regulator says.
In all, Prudential allegedly made misstatements in nine types of communications, such as quarterly fact sheets and customer statements, according to Finra.
And from at least January 2004 to September 2019, Prudential allegedly provided inadequate data for money market funds that were options in retirement plans, the regulator says.
Finra alleges that Prudential lacked the necessary supervisory system and written procedures to comply with the regulator’s advertising rule.
Prudential administers approximately 3,188 defined contribution retirement plans, some of which offer Group VAs. The firm also acts as an introducing broker for certain investments available in retirement plans, a clearing broker for some mutual fund platforms and a full-service broker for certain retail customers, Finra says.
Prudential consented to the fine and a censure without admitting or denying the findings, according to the letter of acceptance. The company also agreed to bring on one or more qualified consultants to review its compliance in regard to communications to plan participants and sponsors about its distributed investment options in retirement plans administered by Prudential as well as the adequacy of the firm’s supervisory systems in relation to these products, Finra says.