Prudential may face regulatory action

Prudential Financial Inc., the second-largest US life insurer, said that regulators have requested information on the company's mutual fund sales, and that certain inquiries may lead to disciplinary action.

In a regulatory filing with the US Securities and Exchange Commission, Prudential said the SEC, the New York Stock Exchange, and the NASD, among others, had requested information "relating to the purchase and sale of mutual fund shares and variable annuities."

Though Prudential had disclosed in a previous filing that regulators were scrutinising its operations related to mutual fund sales, Friday's statement was the company's most explicit indication so far that authorities are nearing a decision on whether to bring enforcement action.

The company said in the filing that "certain of the matters under investigation are likely to lead to proceedings. We are engaged in ongoing discussions with the above organisations and are fully cooperating with them."

In Prudential's document, it added that, among those seeking information was New York State Attorney General Eliot Spitzer, the principal architect of the regulatory enforcement activity against the nation's $7.6 trillion mutual fund industry.

Prudential's disclosure comes as several large institutions have been implicated in a wide-ranging scandal over improper trading of mutual funds, which has reverberated throughout the industry.

A central focus of regulatory probes involved market timing - the rapid-fire buying and selling of mutual fund shares to take advantage of pricing inefficiencies - and trading after normal market hours.