Dec 26 (Reuters) – Pruco Securities LLC has been ordered to
pay more than $10.7 million to customers who were hurt by the
New Jersey-based broker-dealer’s alleged mispricing of mutual
fund orders.
Wall Street’s industry funded-watchdog, the Financial
Industry Regulatory Authority, said on Wednesday that one of
Pruco’s retail brokerage business units mishandled more than
850,000 paper orders from late 2003 to June 2011, resulting in
“inferior” pricing for customers. FINRA also fined Pruco
$550,000 for its pricing errors and an inadequate supervisory
system.
FINRA found that the company did not adequately train its
employees to properly handle mutual fund pricing for paper
orders – those received by fax or mail.
The Investment Company Act of 1940 requires that mutual fund
orders be priced before 4 p.m. on the day the order is received.
Pruco’s brokerage unit, COMMAND, allegedly priced the paper
orders, on average, one or two days late.
Approximately 34,000 customers will receive compensation for
the roughly 37,000 accounts impacted. The firm is in the process
of calculating restitution for up to 3,240 additional customers
who will receive compensation upon the firm’s completion of its
review, FINRA said.
Pruco Securities, based in Newark, is a subsidiary of
Prudential Financial Inc. A company spokesman was not
immediately available for a comment.
