Prudential Financial was accused of covering up fraudulent sales of life insurance policies through Wells Fargo to low-income customers with Hispanic last names.
Many of the customers didn't know what they had purchased and there were "a large number of similarities" between the way Wells Fargo employees opened bogus bank accounts without customers' knowledge and the way Prudential's "MyTerm" policies were sold by the bank, three of the insurer's former employees said in a lawsuit filed in New Jersey state court.
The three employees of Prudential Insurance Co. of America's corporate investigations division said executives ignored their reports of the abuses for fear of alienating Wells Fargo as a business partner.
They said they were placed on administrative leave and escorted from the building in a "perp walk" and now have a "threat of imminent termination hanging over their heads," according to a copy of the complaint in New Jersey state court that was confirmed by a lawyer for the plaintiffs. The lawsuit, reported late Friday by the New York Times, couldn't be immediately confirmed in court records.
"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," Scot Hoffman, a spokesman for the insurer, said in an e-mailed statement.
"Beyond that, Prudential does not comment on employment matters," Hoffman said. "We are confident that the court will agree once the true facts are revealed during the litigation."
Wells Fargo admitted this year that its bankers may have created millions of fraudulent accounts. It fired more than 5,000 employees over five years, refunded customers and agreed to pay fines totaling $185 million. That was followed by congressional hearings and the resignation of Chief Executive Officer John Stumpf. The bank still faces dozens of lawsuits by former employees, customers and investors.
Wells Fargo, which isn't a defendant in the lawsuit against Prudential, has eliminated product sales goals that helped fuel the creation of fake accounts by bankers eager for bonuses or fearing being fired.
"There are no incentives for direct or referred product sales for retail bankers, including insurance products," Mary Eshet, a spokeswoman for the San Francisco-based bank, said in an e-mail. "We made this change because we want to ensure nothing gets in the way of focusing on the best interests of our customers."
The Prudential MyTerm policies were aimed at people who couldn't otherwise obtain life insurance and could be purchased only at kiosks located at Wells Fargo branches or online using Wells Fargo credit cards or bank accounts, according to the complaint.
A review found that 70 percent of the policies sold in 2014, the year the program started, lapsed, and that sales of the policies spiked near the end of each quarter, according to the complaint. The policies were sold predominantly to people with Hispanic names in Southern California, South Florida and southern regions of Texas and Arizona, according to the plaintiffs.
Invoking New Jersey's Conscientious Employee Protection Act, the three seek lost wages and other compensation, plus punitive damages.
Prudential's Hoffman said the insurer has acted responsibly and proactively since beginning its relationship with Wells Fargo. The company reached out to customers and received feedback last year that raised questions about product lapse rates. As a result, Prudential contacted Wells Fargo and, based on reports about the bank's sales practices, expanded its review, Hoffman said.
The case is Broderick v.The Prudential Insurance Co. of America, Superior Court of New Jersey Law Division -- Essex County.