Prudential may hit Wells Fargo for account scandal costs-filing

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By Suzanne Barlyn

<span class="articleLocation”>Feb 22 Prudential Financial Inc, the
target of probes and lawsuits related to whether Wells Fargo &
Co retail bankers improperly sold its insurance, may
press the bank to cover costs it has run up because of the flap,
according to a filing.

“The company has provided notice to Wells Fargo that it may
seek indemnification under the MyTerm distribution agreement,”
Prudential said in a Feb. 17 regulatory filing.

It was unclear how much in costs Prudential may seek.

A push by the Newark, New Jersey-based insurer for Wells to
cover its costs could become another headache for the San
Francisco-based bank, whose sales practices have been under a
spotlight.

Last year, federal regulators ordered Wells Fargo to pay
$190 million in fines and restitution because they said its high
pressure sales environment pushed employees to open as many as 2
million deposit and credit card accounts without customers’
permission.

A Wells spokesman declined to comment on the filing.

In December, Prudential suspended the distribution of
MyTerm, a low-cost life insurance policy it sold through Wells,
pending a review of how the product was sold by the bank.

Prudential’s move followed a wrongful termination lawsuit
filed in New Jersey by three former managers in its corporate
investigation division who said Wells employees signed up bank
customers for the Prudential policies without the customers’
knowledge or permission.

Since bankers are not licensed to sell insurance, Wells
Fargo employees were meant to direct customers to either
self-service kiosks in branches or online to buy the insurance,
without getting into specifics about the products.

In some cases, policies were opened and closed after a month
or two and then reopened, and sometimes monthly fees were
withdrawn from the accounts, according to evidence in the
lawsuit.

Insurance regulators in California and New Jersey are
investigating the allegations.

Prudential was also hit with a class action lawsuit on
behalf of Wells Fargo customers who said they were unknowingly
signed up for Prudential policies. The lead plaintiff withdrew
the lawsuit on February 17.

Prudential has received “inquiries, requests for information
a subpoena and a civil investigative demand related to this
matter from state and federal regulators,” the insurer said in
the Feb 21 filing. Prudential also received a demand from
shareholders to inspect its books and records, it said.



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