In a somewhat belated reaction, Prudential suspended the sale of its life insurance policies through Wells Fargo as it reviews a lawsuit filed by three whistle-blowers in New Jersey in the first week of December, 2016.
In the lawsuit, the plaintiffs alleged that Prudential terminated their employment because they complained that Wells Fargo was selling Prudential's policies to Wells' customers and without the supposed policyholders' knowledge or agreement in many cases. In that way, the former employees alleged, Wells Fargo employees could meet their super-sized sales quotas at Wells Fargo; not only the new accounts and other financial products, but the "MyTerm" life insurance policies issued by Wells in Prudential's name, all counted toward meeting those crushing quotas.
The former employees were all employed by Prudential as supervisors in the Corporate Investigative Division of Prudential's Legal Department. The lead plaintiff, Julie Han Broderick, Esquire, was Prudential's Vice-President, Corporate Counsel and one of the heads of Prudential's Corporate Investigations Division. See the former supervisors' New Jersey complaint, below, and Stacy Cowley, "Prudential Suspends Sales of Its Life Policies by Wells Fargo" (New York Times Online, posted Monday, December 12, 2016).
This is a change from Prudential's initial reaction. At least to the press, Prudential at first denied that it fired the supervising investigators in retaliation for uncovering the evidence of fraud. Instead, Prudential at first insisted that the three plaintiffs, whose lawsuit Prudential says it is now reviewing, were terminated from its employment because they were alleged to have committed as-yet unspecified "ethics violations."
Prudential's new response to the lawsuit came the same day that the California Insurance Commissioner announced an investigation into Prudential's practices in "the sale of Prudential insurance policies by Wells Fargo & Co." See James Rufus Koren, "California to Investigate Prudential Insurance Policies Sold Through Wells Fargo" (Los Angeles Times Online, posted on Monday, December 12, 2016).
Here is a link, below, to the complaint which is being reviewed by Prudential and others at this time. You can review it for yourself through the following link. The complaint was filed in Superior Court in New Jersey on Tuesday, December 6, 2016. It became the first of what is likely to be many pleadings filed in the case of Broderick v. Prudential Insurance Co. of America (Superior Court of New Jersey Law Division -- Essex County, Case Number to be assigned), courtesy of the New York Times website: https://assets.documentcloud.org/documents/3234987/Prudential-Wrongful-Termination-Lawsuit.pdf.
Moreover, there may be more to come. "Prudential is not the only outside firm that sells products through Wells Fargo. The bank offers a variety of insurance products and annuities from other firms. It's not clear whether those companies are reviewing how Wells Fargo sold their products." James Rufus Koren, L.A. Times, supra.
This has been a Postscript to an article published yesterday. Here is the genuine original article, courtesy of Insurance Claims and Bad Faith Law Blog:
PRUDENTIAL INVESTIGATED WELLS FARGO'S "ROI" POLICIES. GUESS WHAT THEY FOUND?
Prudential made a deal with Wells Fargo. Wells could issue "a low-cost life insurance policy to the bank's retail customers." Wells Fargo issued the policies on Prudential paper. These policies, called "MyTerm" policies, were basically "ROI" policies, or insurance for the Return on Investment.
When the story broke of 5,000 employees at Wells Fargo somehow setting up fake accounts for Wells' customers in order to get sales credits for the sales quotas set at Wells, Prudential decided to investigate these "ROI" policies issued by Wells in Prudential's name.
Guess what they found?
"'This definitely was the same kind of [alleged] conduct that Wells was committing, but through Prudential,'" said one of three whistle-blowers, "an attorney and former co-head of Prudential's corporate investigations division[.]" Turns out that Wells Fargo employees could get sales credits good toward their sales quotas at Wells by issuing fake 'Prudential' MyTerm life insurance policies in the names of Wells' customers to cover the Return on Investment of the nonexistent accounts. See Stacy Cowley and Matthew Goldstein, "Accusations of Fraud at Wells Fargo Spread to Sham Insurance Policies" (New York Times Online, posted on December 9, 2016), at http://www.nytimes.com/2016/12/09/business/dealbook/wells-fargo-accusations-sham-insurance-policies.html.
Lessons learned. Some would say, though, that they already knew what there is to learn from this particular lesson.
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