Prudential Financial Inc. was accused of covering up fraudulent sales of life insurance policies through Wells Fargo & Co. to low-income customers, marking the latest flareup of the fake-accounts scandal plaguing the third-largest U.S. lender by assets.
Many of the customers, who often had Hispanic last names, didn’t know what they had purchased and there were “a large number of similarities” between the way Wells Fargo employees opened bogus bank accounts without customers’ knowledge and the way Prudential’s “MyTerm” policies were sold by the bank, three of the insurer’s former employees said in a lawsuit filed in New Jersey state court.
Three months after the Wells Fargo scandal erupted, resulting in the October departure of Chief Executive Officer John Stumpf, the San Francisco-based lender is still struggling to move past the crisis. Even as Donald Trump’s surprise election may ease pressure from Washington, an attempt to force aggrieved customers into closed-door arbitration is drawing a legislative backlash in California. Now, amid accusations of a cover-up at Prudential, alleged fake accounts are infecting another financial giant.
The three employees of Prudential Insurance Co. of America’s corporate investigations division said executives ignored their reports of the abuses for fear of alienating Wells Fargo as a business partner. They said they were placed on administrative leave and escorted from the building in a “perp walk” and now have a “threat of imminent termination hanging over their heads,” according to a copy of the complaint in New Jersey state court that was confirmed by a lawyer for the plaintiffs. The lawsuit, reported late Friday by the New York Times, couldn’t be confirmed immediately in court records.
“These former employees were terminated for appropriate and legitimate reasons that were entirely unrelated to Prudential’s business with Wells Fargo and Prudential’s decision to examine sales of the MyTerm product,” Scot Hoffman, a spokesman for the insurer, said in an e-mailed statement.
“Beyond that, Prudential does not comment on employment matters,” Hoffman said. “We are confident that the court will agree once the true facts are revealed during the litigation.”
Wells Fargo admitted in September that its bankers may have created millions of fraudulent accounts. It fired more than 5,000 employees over five years, refunded customers and agreed to pay fines totaling $185 million. That was followed by congressional hearings and Stumpf’s resignation on Oct. 12. The bank still faces dozens of lawsuits by former employees, customers and investors.