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Wells Fargo fraud extends to Prudential's MyTerm insurance, ex-managers claim

Following news of Wells Fargo & Co.'s fraudulent sales practices, Prudential Financial Inc. — which sells a low-cost life insurance policy to the bank's retail customers as part of a joint venture — called for an internal review of its transactions with the bank and found that it was affected by the fraudulent activity, The New York Times reported Dec. 9, citing plaintiffs in a wrongful termination case filed Dec. 6 against the insurer.

According to three former managers at Prudential, who are suing the Newark, N.J.-based insurance company, Wells Fargo employees appeared to have signed up bank customers, without their authorization, for Prudential insurance, particularly its MyTerm policies that do not require applicants to take medical exams, the paper noted.

The plaintiffs — Julie Broderick, a former co-head of Prudential's corporate investigations division, and colleagues Darron Smith and Thomas Schreck — were part of an investigations unit at Prudential tasked with looking for irregularities in 15,000 MyTerm policy accounts sold through Wells Fargo. They claim that they were fired in November when they pressed others in the company to further investigate their findings and to notify regulators.

Scot Hoffman, a spokesman for Prudential, told S&P Global Market Intelligence that the three employees' termination does not have anything to do with Prudential's venture with Wells Fargo and Prudential's decision to review MyTerm accounts.

"These former employees were terminated for appropriate and legitimate reasons that were entirely unrelated to Prudential's business with Wells Fargo and Prudential's decision to examine sales of the MyTerm product," he said.

Hoffman added that Prudential continues to investigate the policies sold through Wells Fargo, and, once done, will review the matter with regulators.