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)
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Wednesday, June 6, 2007
NTN - News to Note 7-6-2007
Economic Times, 7-6-2007 page 10
Prudential closes institutional brokerage
Us insurance company Prudential Finance said that it will shut down its institutional stock research and trading business, Prudential Equity Group. ending a rocky 26-year stay on Wall Street. Nine offices in US as well as in London, Zurich, Paris and Tokyo will be closed. 400 employees will be terminated as operations are wound down during the quarter ending June 30.
Prudential's strategy is to be in businesses where we have significant scale, said Prudential spokeswoman Theresa Miller.
"The resaerch and trading markets are really competitive, really challenging, and are not an area where we've been able to achieve that scale or success for our clients, for our shareholders and certainly our employees."
The move furthers Prudential's widrawal from the securities industry, where shrinking commissions and regulatory changes have weeded out dozens of traditional brokers. Reforms in 2002 pushed through by then Newyork attorney General Eliot Spitzer make it more difficult for Wall Street firms to cover research costs. Stock trading for big institutions is also under pressure, thanks to thinning fees and competition from electronic systems and from the biggest Wall street houses.
Prudential closes institutional brokerage
Us insurance company Prudential Finance said that it will shut down its institutional stock research and trading business, Prudential Equity Group. ending a rocky 26-year stay on Wall Street. Nine offices in US as well as in London, Zurich, Paris and Tokyo will be closed. 400 employees will be terminated as operations are wound down during the quarter ending June 30.
Prudential's strategy is to be in businesses where we have significant scale, said Prudential spokeswoman Theresa Miller.
"The resaerch and trading markets are really competitive, really challenging, and are not an area where we've been able to achieve that scale or success for our clients, for our shareholders and certainly our employees."
The move furthers Prudential's widrawal from the securities industry, where shrinking commissions and regulatory changes have weeded out dozens of traditional brokers. Reforms in 2002 pushed through by then Newyork attorney General Eliot Spitzer make it more difficult for Wall Street firms to cover research costs. Stock trading for big institutions is also under pressure, thanks to thinning fees and competition from electronic systems and from the biggest Wall street houses.
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