Prudential

Federal Reserve and FDIC Post Resolution Plans for Eight Major Financial Firms

 

On July 5, 2017, the Federal Reserve Board (the “Board“) and the Federal Deposit Insurance Corporation (“FDIC“) posted the public portions of the annual resolution plans, commonly known as living wills, for eight of the largest financial firms in the US. Although the eight firms this—is Bank of America Corporation, The Bank of New York Mellon Corporation, Citigroup Inc., The Goldman Sachs Group, Inc., JPMorgan Chase & Co., Morgan Stanley, State Street Corporation and Wells Fargo & Company—were required to submit their plans on July 1, 2017, the Board and FDIC also announced that they were extending the deadline for American International Group, Inc. (AIG) and Prudential Financial, Inc. to submit their next resolution plans from December 17, 2017 to December 18, 2017. Report. Press Release.

Goldman Sachs and Prudential Settle RMBS Action

On January 6, Judge Susan D. Wigenton of the United States District Court for the District of New Jersey “so ordered” the parties’ stipulation of voluntary dismissal with prejudice of Prudential’s claims against Goldman Sachs after the parties reached an undisclosed settlement.  Prudential and its affiliates had sued Goldman Sachs and its affiliates for alleged material misrepresentations and omissions in the offering materials for more than $375 million in RMBS.  Prudential asserted claims for common law fraud and fraudulent inducement, negligent misrepresentation, equitable fraud and New Jersey civil RICO violations.  Order.

Court Denies Goldman Sachs’s Motion to Dismiss RMBS Action Brought by Prudential

On April 9, Judge Susan Wigenton of the U.S. District Court for the District of New Jersey denied Goldman Sachs’s motion to dismiss Prudential’s complaint alleging fraud in connection with the sale of $375 million in RMBS.  Goldman argued that Prudential cannot bring claims under New Jersey state laws because Goldman is based in New York and the alleged misrepresentation and omissions at issue were contained in offering materials drafted and disseminated from New York.  Judge Wigenton concluded it was premature to make a choice of law determination and held that Prudential had adequately pleaded its fraud, negligent misrepresentation, civil RICO and RICO conspiracy claims under New Jersey law.  Decision.

The FSA Fines Prudential £30m over its Failed $35.5bn Bid for AIA

The fine has been levied for Prudential’s failure to inform the FSA that it was seeking to acquire the Asian arm of AIG at an appropriate time, in breach of FSA Principles and UKLA Listing Principles.  Prudential should have notified the FSA of its intentions at the earliest opportunity, so that the regulator could decide whether to approve or reject the deal on regulatory grounds.  But according to an FSA news release, Prudential failed to reveal its intentions to the FSA even when quizzed on its plans for expansion in Asia.  The delay in notification, which finally came after a press leak, meant that the FSA was forced to rush its analysis of the proposed deal.

In addition to the fine, the FSA also censured Prudential CEO Tidjane Thiam, although it stopped short of finding any lack of fitness or propriety on his part.

Prudential Sues Bank of America Over $2 Billion in RMBS

On March 14, several Prudential entities filed suit in the United States District Court for the District of New Jersey against several Bank of America and Merrill Lynch entities in connection with Prudential’s investments in more than $2 billion in RMBS sold by the Defendants.  The Complaint alleges that the Defendants made knowingly false statements of material fact and omissions regarding compliance with underwriting guidelines, omissions regarding due diligence results and misrepresentations as to owner-occupancy rates, appraisals, loan-to-value ratios, assignments of the loans underlying the securities to the trusts and the credit ratings of the securities.  Prudential asserts causes of action for common-law fraud and fraudulent inducement, aiding and abetting fraud and fraudulent inducement, equitable fraud, negligent misrepresentation, violations of New Jersey’s civil RICO statute and violations of sections 11 and 12(a)(2) of the Securities Act of 1933.  Complaint.

Prudential Files RMBS Lawsuits Against Goldman Sachs and RBS

On August 21, 2012, several Prudential entities sued several RBS entities in New Jersey State court seeking to recover damages allegedly suffered in connection with over $343 million in RMBS.  Prudential also sued several Goldman Sachs entities in New Jersey State court on August 24, 2012, seeking to recover damages allegedly suffered in connection with over $270 million in RMBS.  In both cases, Prudential alleges that the offering documents for the RMBS at issue contain untrue statements of material fact and omissions concerning the underwriting standards used to originate the underlying loans, the result of the defendants’ pre-closing due diligence, owner-occupancy rates, the process by which appraisals in connection with the underlying loans were performed, the assignment of the loans to the RMBS trusts, and the credit ratings assigned to the RMBS.  In the case against RBS, Prudential also alleges that the offering documents contain untrue statements of material fact and omissions concerning the loans’ LTV and CLTV ratios; in the case against Goldman Sachs, Prudential also alleges that the offering documents contain untrue statements of material fact and omissions concerning exceptions made during the loan underwriting process.  Prudential asserts causes of action for common-law fraud / fraudulent inducement, aiding and abetting fraud, negligent misrepresentation, and violation of New Jersey’s civil RICO statute.  Prudential seeks compensatory damages, treble damages in connection with its RICO claim, rescission, attorneys’ fees and costs, and prejudgment interest.  RBS Complaint.  Goldman Sachs Complaint.