Prudential Insurance Is Fined $1.3 Million
By Bloomberg News
May 16, 1997
The Prudential Insurance Company of America has been fined $1.3 million by a National Association of Securities Dealers panel for dismissing an employee who reported improper sales practices in 1993.
Prudential, the nation's largest insurance company, was ordered to pay Howard Siegel, once a district manager reporting for its offices in Woodland Hills, Calif., $113,000 in damages and more than $1.2 million in punitive and compensatory damages.
Prudential, the Newark-based company that counts one in five Americans among its customers, said it would seek to have the fine dismissed. N.A.S.D. arbitrators heard the case because Mr. Siegel, who now works for the New York Life Insurance Company, was licensed by the association to sell products like variable life insurance.
''The decision by the arbitrators in this matter was wrong, and the award grossly excessive,'' said Kevin Heine, a spokesman for Prudential.
The fine comes as the insurer tries to set to rest charges that its agents nationwide used deceptive practices to sell insurance to some of its 10.7 million customers from 1982 to 1995. A class-action settlement approved by a Federal judge in March could cost the policyholder-owned company as much as $2 billion.
Mr. Siegel, who was dismissed by Prudential in 1993, contended that Prudential's account of his departure hurt his reputation. Mr. Siegel was not available for comment.
Arbitration rulings are rarely overturned. State judges tend to support them to keep disputes from weighing on an already burdened court systems.