Prudential Financial shuts down Prudential Equity Group

http://www.suntimes.com/business/415988,peg060607.article

The Newark, N.J.-based company did not say why it is closing the unit, which last year turned a profit of $34 million before taxes.

Prudential Equity Group trades stocks for institutional investor clients like pensions and mutual funds. The business distributes research reports about stocks, politics, the economy and investment strategies to these clients to help them decide how to invest their money.

Last year, the division reported revenue of $260 million, a small fraction of the company's $32.49 billion in revenue.

Prudential expects shutting the business down will cost $110 million, with severance pay for workers costing about $75 million. These costs will be recorded this quarter, Prudential said.

Last year, Prudential Equity Group agreed to pay $600 million in fines and reimbursements following a Securities and Exchange Commission investigation that concluded Prudential brokers defrauded at least 50 mutual funds between 1999 and 2003. (notice the importance of compliane function)