Two former Prudential Insurance compliance officers were awarded 750,000 dollars each by a three-person arbitration panel this past July in a case alleging a cover-up of insurance sales practice abuses. The plaintiffs claimed they were fired for refusing to falsify information to regulators, and were then terminated and defamed on their U-5s.
The NASDR award was made public this fall.
Daniel Parsons, a regional compliance director, and Ellen Petri, a compliance manager for Prudential's mid-Atlantic territory in 1996, claimed the company generally ignored compliance controls and that internal audits of the firm's Broadacres, N.J., office uncovered unlawful insurance sales practices.
According to the award summary, Parsons said he refused to sign a letter from Prudential's corporate legal office responding to an inquiry from New Jersey insurance regulators regarding the Broadacres office. Parsons called the letter "inadequate and untruthful" and claimed it was part of Prudential's strategy to cover up problems while settling litigation.
Later, both Parsons and Petri were terminated under the pretext that they mishandled an e-mail. On their respective U-5s, Prudential wrote the two "displayed lapse of judgement which no longer enables [him/her] to perform job functions."
Parsons claimed he was the primary target, while Petri alleged she was terminated in retaliation for her cooperation with Parsons.
Both Parsons and Petri were awarded 250,000-plus dollars 500,000 dollars in punitive damages. The arbitrators also ruled that the U-5s Prudential filed were defamatory, and ordered the firm to file revised U-5s saying the terminations were voluntary.
"These were two good people and something very wrong was done to them," says attorney Martin Lentz of Philadelphia, who represented Parsons and Petri.
Prudential Insurance did not return calls.
Separately, through June, the insurer had paid out more than 1 billion dollars to some 250,000 policyholders in a class-action settlement that alleged deceptive insurance sales practices.