Prudential 2015 Annual Report Download - page 224

PRUDENTIAL FINANCIAL, INC.
Notes to Consolidated Financial Statements
2008, a purported nationwide class action lawsuit was filed in the United States District Court for the Southern District of California, Wang
v. Prudential Financial, Inc. and Prudential Insurance, claiming that the Company failed to pay its agents overtime and provide other
benefits in violation of California and federal law and seeking compensatory and punitive damages in unspecified amounts. In September
2008, Wang was transferred to the United States District Court for the District of New Jersey and consolidated with the Bouder matter.
Subsequent amendments to the complaint resulted in additional allegations involving purported violations of an additional nine states’
overtime and wage payment laws. In February 2010, Prudential moved to decertify the federal overtime class that had been conditionally
certified in March 2008 and moved for summary judgment on the federal overtime claims of the named plaintiffs. In July 2010, plaintiffs
filed a motion for class certification of the state law claims. In August 2010, the district court granted Prudential’s motion for summary
judgment, dismissing the federal overtime claims. In January 2013, the Court denied plaintiffs’ motion for class certification in its entirety.
In July 2013, the Court granted plaintiffs’ motion for reconsideration, permitting plaintiffs to file a motion to certify a class of employee
insurance agents seeking recovery under state wage and hour laws. In September 2013, plaintiffs filed a renewed motion for class
certification. In February 2015, the federal District Court for New Jersey granted in part, and denied in part, plaintiffs’ renewed class
certification motion. It certified for class treatment plaintiffs’ wage payment claims which include allegations that the Company made
improper deductions from the wages of its former common law agents in California, New York, and Pennsylvania, and its financial
services associates in California and New York. The Court denied plaintiffs’ attempt to certify a class based on the Company’s alleged
failure to pay overtime to its former common law agents and its financial services associates in California, Illinois, New York and
Pennsylvania. In March 2015, the Company filed a motion requesting that the Court reconsider its decision to partially grant plaintiffs’
renewed class certification motion with regard to its former common law agents.
Lehman Brothers Special Financing Inc.
In September 2014, Lehman Brothers Special Financing Inc. through Lehman Brothers Holdings Inc. (“LBHI”), the Plan
Administrator under the Modified Third Amended Joint Chapter 11 Plan of LBHI and its affiliated debtors, filed a Third Amended
Complaint in the United States Bankruptcy Court for the Southern District of New York against certain indenture trustees, certain special-
purpose entities, and a putative class of 158 noteholders, including Gibraltar Life Insurance Company, Ltd. (f/k/a AIG Edison—GA Non
Dima), in its adversary proceeding to recover funds alleged to have been paid improperly to the noteholders. In October 2014, the matter
was mediated. In May 2015, the matter was settled and Gibraltar was dismissed from the adversary proceeding.
Financial Disclosures Concerning Death Benefits and Unclaimed Property
City of Sterling Heights General Employees’ Retirement System v. Prudential Financial, Inc., et al.
In August 2012, a purported class action lawsuit, was filed in the United States District Court for the District of New Jersey, alleging
violations of federal securities law. The complaint names as defendants the Company’s Chief Executive Officer, the Chief Financial
Officer, the Principal Accounting Officer and certain members of the Company’s Board of Directors. The complaint alleges that knowingly
false and misleading statements were made regarding the Company’s current and future financial condition based on, among other things,
the alleged failure to disclose: (i) potential liability for benefits that should either have been paid to policyholders or their beneficiaries, or
escheated to applicable states; and (ii) the extent of the Company’s exposure for alleged state and federal law violations concerning the
settlement of claims and the escheatment of unclaimed property. The complaint seeks an undetermined amount of damages, interest,
attorneys’ fees and costs. In May 2013, the complaint was amended to add three additional putative institutional investors as lead plaintiffs:
National Shopmen Pension Fund, The Heavy & General Laborers’ Locals 472 & 172 Pension & Annuity Funds, and Roofers Local
No. 149 Pension Fund. In June 2013, the Company moved to dismiss the amended complaint. In February 2014, the Court denied the
Company’s motion to dismiss. In July 2014, plaintiffs’ filed a motion to certify a class comprised of investors who purchased shares of the
Company’s Common Stock between May 5, 2010 and November 4, 2011. That motion was subsequently withdrawn and refiled in
December 2014. In August 2015, Plaintiffs’ class certification motion was granted. In September 2015, defendants filed a petition with the
United States Court of Appeals for the Third Circuit seeking permission to file an appeal from the order certifying a class. In January 2016,
the defendants’ petition to file an appeal was granted.
Stephen Silverman, Derivatively on Behalf of Prudential Financial, Inc. v. John R. Strangfeld, et. al.,
In October 2012, a shareholder derivative lawsuit, was filed in the United States District Court for the District of New Jersey, alleging
breaches of fiduciary duties, waste of corporate assets and unjust enrichment by certain senior officers and directors. The complaint names
as defendants the Company’s Chief Executive Officer, the Chief Financial Officer, the Principal Accounting Officer, certain members of
the Company’s Board of Directors and a former Director. The complaint alleges that the defendants made false and misleading statements
regarding the Company’s current and future financial condition based on, among other things, the alleged failure to disclose: (i) potential
liability for benefits that should either have been paid to policyholders or their beneficiaries, or escheated to applicable states; and (ii) the
extent of the Company’s exposure for alleged state and federal law violations concerning the settlement of claims and the escheatment of
unclaimed property. The complaint seeks an undetermined amount of damages, attorneys’ fees and costs, and equitable relief including a
direction for the Company to reform and to improve its corporate governance and internal procedures to comply with applicable laws.
Paul Memo, Derivatively on Behalf of Prudential Financial, Inc. v. John R. Strangfeld, Jr. et. al.
In September 2013, before the conclusion of the Special Litigation Committee’s investigation, the shareholder who submitted the
Demand filed a shareholder derivative lawsuit, Paul Memo, Derivatively on Behalf of Prudential Financial, Inc. v. John R. Strangfeld, Jr.
et. al., in New Jersey Superior Court, Essex County. The complaint (the “Memo complaint”) names as defendants the Company’s Chief
Executive Officer, the Vice Chairman, a former Chief Financial Officer, the Principal Accounting Officer, certain members of the
222 Prudential Financial, Inc. 2015 Annual Report