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Prudential may hit Wells Fargo for account scandal costs: Filing


(Reuters) — Prudential Financial Inc., the target of probes and lawsuits related to whether Wells Fargo & Co. retail bankers improperly sold its insurance, may press the bank to cover costs it has run up because of the flap, according to a filing.

"The company has provided notice to Wells Fargo that it may seek indemnification under the MyTerm distribution agreement," Prudential said in a Feb. 17 regulatory filing.

It was unclear how much in costs Prudential may seek.

A push by the Newark, New Jersey-based insurer for Wells to cover its costs could become another headache for the San Francisco-based bank, whose sales practices have been under a spotlight.

Last year, federal regulators ordered Wells Fargo to pay $190 million in fines and restitution because they said its high pressure sales environment pushed employees to open as many as 2 million deposit and credit card accounts without customers' permission.

A Wells spokesman declined to comment on the filing.

In December, Prudential suspended the distribution of MyTerm, a low-cost life insurance policy it sold through Wells, pending a review of how the product was sold by the bank.

Prudential's move followed a wrongful termination lawsuit filed in New Jersey by three former managers in its corporate investigation division who said Wells employees signed up bank customers for the Prudential policies without the customers' knowledge or permission.

Since bankers are not licensed to sell insurance, Wells Fargo employees were meant to direct customers to either self-service kiosks in branches or online to buy the insurance, without getting into specifics about the products.

In some cases, policies were opened and closed after a month or two and then reopened, and sometimes monthly fees were withdrawn from the accounts, according to evidence in the lawsuit.

Insurance regulators in California and New Jersey are investigating the allegations.

Prudential was also hit with a class action lawsuit on behalf of Wells Fargo customers who said they were unknowingly signed up for Prudential policies. The lead plaintiff withdrew the lawsuit on Feb. 17.

Prudential has received "inquiries, requests for information a subpoena and a civil investigative demand related to this matter from state and federal regulators," the insurer said in the Feb. 21 filing. Prudential also received a demand from shareholders to inspect its books and records, it said.

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