Prudential Considering Action Against Wells Fargo
Wells Fargo may face more financial repercussions over last year’s scandal. In September, the financial giant was fined $185 million for opening millions of fake accounts under customers’ names without their knowledge or permission. Now, the bank may face more losses, as Prudential Financial may press the bank to cover their costs resulting from the probes and lawsuits after Wells Fargo retail bankers improperly sold its MyTerm insurance.
“The company has provided notice to Wells Fargo that it may seek indemnification under the MyTerm distribution agreement,” Prudential said in a February 17 regulatory filing.
In its filing, Prudential also reported it has received, “inquiries, requests for information a subpoena and a civil investigative demand related to this matter from state and federal regulators.” Shareholders have also demanded to inspect books and records.
Prudential suspended the distribution of MyTerm, a life insurance policy sold through Wells Fargo, in December when it launched an investigation into how the bank was selling the product. This followed a wrongful termination suit that had been filed in New Jersey by three former Prudential corporate investigation managers. They were fired after reporting that Wells employees had signed up bank customers for Prudential policies without those customers’ permission or knowledge.
Legally, bankers cannot sell insurance since they are not licensed, which means Wells Fargo employees should have directed interested customers to self-service kiosks at branches or online.
Prudential has not made it clear how much they may seek from Wells Fargo.