|
Fla. charges Prudential
|
 |
December 9, 1996: 4:52 p.m. ET
State says Pru is obstructing probe into alleged 'churning'
|
TALLAHASSEE, Fla. - The Florida Insurance Commission on Monday charged Prudential Insurance Co. of America with obstructing a probe into allegations that the company misrepresented its insurance policies as investments.
Florida Insurance Commissioner Bill Nelson filed a formal administrative complaint alleging that the company obstructed the investigation, destroyed documents and ignored subpoenas.
Prudential spokesman Richard Riley responded in comments to CNNfn that his firm has provided investigators from Florida and other states with "thousands or records and hundreds of witnesses."
Riley said Prudential has admitted that some workers "inadvertently" destroyed documents. He said Prudential fired a senior executive who had supervised the employees.
Prudential has said it accepts the finding of a multi-state task force that concluded some of the firm's salespeople engaged in deceptive practices during the 1980s.
Earlier this year, the company tentatively settled a class-action lawsuit by agreeing to pay plaintiffs at least $410 million -- and perhaps as much as $1 billion.
Prudential also settled charges with 45 states and the District of Columbia, paying $35 million in fines.
However, that agreement excluded Florida and four other states.
Florida last year began probing allegations that Prudential "churned" accounts and misrepresented some policies as investments.
"Churning" is a practice where agents persuade customers -- often elderly or uninformed clients -- to use the built-up cash value of existing life-insurance policies to finance more expensive ones.
Several states and individual policyholders accuse Prudential of overcharging as many as 10 million people over the past 15 years or so.
Nelson said that Florida cases under investigation stretch back over at least 14 years, and could involve more than 100,000 Florida policyholders.
The insurance commissioner said that unless Prudential provides requested documents, the company could face sanctions -- possibly including loss of its license to operate in Florida.
"By my order today, I'm putting the burden on Prudential to show why I should not impose the stiffest of fines or revoke or suspend its license to do business in Florida," Nelson told a news conference.
As insurance commissioner, Nelson can revoke or suspend licenses of companies whose sales practices injure Florida consumers.
Florida Attorney General Bob Butterworth said his department is also investigating the company.
"We will pursue all the options available to us to ensure that all those who suffered are fairly compensated," Butterworth said.
From staff and wire reports.
|
|
|
|
|
|
Prudential Home Page
|
Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney
|
|
|
|
 |
|
