Prudential 2007 Annual Report Download - page 184

PRUDENTIAL FINANCIAL, INC.
Notes to Consolidated Financial Statements
21. COMMITMENTS AND GUARANTEES, CONTINGENT LIABILITIES AND LITIGATION AND
REGULATORY MATTERS (continued)
to as the “contractual annuity date”) and the contracts were not annuitized at their contractual annuity dates. Some of these contracts also
were affected by data integrity errors resulting in incorrect contractual annuity dates. The lack of notice and data integrity errors, as
reflected on the annuities administrative system, all occurred before the acquisition of the American Skandia entities by the Company. The
remediation and administrative costs of the remediation program are subject to the indemnification provisions of the acquisition agreement
pursuant to which the Company purchased the American Skandia entities in May 2003 from Skandia.
Securities
Prudential Securities has been named as a defendant in a number of industry-wide purported class actions in the United States District
Court for the Southern District of New York relating to its former securities underwriting business. Plaintiffs in one consolidated
proceeding, captioned In re: Initial Public Offering Securities Litigation, allege, among other things, that the underwriters engaged in a
scheme involving tying agreements, undisclosed compensation arrangements and research analyst conflicts to manipulate and inflate the
prices of shares sold in initial public offerings in violation of the federal securities laws. Certain issuers of these securities and their current
and former officers and directors have also been named as defendants. In October 2004, the district court granted plaintiffs’ motion for
class certification in six “focus cases.” In December 2006, the United States Court of Appeals for the Second Circuit vacated that decision
and remanded the case to the district court for further proceedings. In August 2000, Prudential Securities was named as a defendant, along
with other underwriters, in a purported class action, captioned CHS Electronics Inc. v. Credit Suisse First Boston Corp. et al., which alleges
on behalf of issuers of securities in initial public offerings that the defendants conspired to fix at 7% the discount that underwriting
syndicates receive from issuers in violation of federal antitrust laws. Plaintiffs moved for class certification in September 2004 and for
partial summary judgment in November 2005. The summary judgment motion has been deferred pending disposition of the class
certification motion. In April 2006, the district court denied class certification. In September 2007, the Second Circuit Court of Appeals
reversed the district court’s decision denying class certification and remanded the case to the district court for further proceedings. In a
related action, captioned Gillet v. Goldman Sachs et al., plaintiffs allege substantially the same antitrust claims on behalf of investors,
though only injunctive relief is currently being sought.
182 Prudential Financial 2007 Annual Report