Investor Fraud
During the 1980s and 1990s, Prudential Securities Incorporated (PSI), formerly a division of Prudential Financial, was investigated by the Securities and Exchange Commission (SEC) for suspected fraud. During the investigation, it was found that PSI had defrauded investors of close to $8 billion, the largest fraud found by the SEC in US history to that point. The SEC charged that Prudential allowed rogue executives to cheat customers on a large scale and blithely ignored a 1986 SEC order to overhaul its internal enforcement of securities laws. In all, some 400,000 individual investors lost money on the deals.
Prudential financial eventually settled with investors for $330 million. Prudential said it would repay customers across the U.S. who lost money on the company's limited partnerships in the 1980s. In addition, the firm was required to pay another $41 million in fines. The settlement also resolved investigations of the firm by the National Association of Securities Dealers and 49 states, including California, where 52,000 investors lost money in Prudential limited partnerships. Further investigation was conducted by the SEC into the executives of the company to determine the extent of the fraud.
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Famous quotes containing the word fraud:
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—Ralph Waldo Emerson (1803–1882)