Prudential Sued by Debt Holders Over Subprime Loss Disclosure
By Andrew Frye
May 8, 2009
May 8 (Bloomberg) -- Prudential Financial Inc., the second- biggest U.S. life insurer, was sued on behalf of holders of junior subordinated notes who said the company failed to disclose impairments on assets tied to subprime mortgages.
The complaint, filed in March in U.S. District Court in New Jersey, names Prudential and some of its executives and directors as defendants, the insurer said today in its quarterly filing.
Investors in financial companies are turning to the courts after the subprime meltdown and recession pushed down the value of stocks and bonds issued by banks and insurers. Newark, New Jersey-based Prudential returned to profitability in the first quarter with $14 million of net income after accumulating $1.7 billion in losses in the final two quarters of 2008. The company's stock is down 37 percent in 12 months.
The complaint said that Prudential's securities registration statement and prospectus in March 2006 contained "material misstatements or omissions," the insurer said.
The case is Bauer v. Prudential Financial, Inc., et al., U.S. District Court for the District of New Jersey.
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