Prudential Financial, Inc.

Period: 02/15/2019 to 08/02/2019
Lead Plaintiff Deadline: 01/27/2020


A securities class action has been filed against Prudential Financial, Inc. (PRU) on behalf of an institutional investor seeking to represent purchasers of Prudential Financial common stock during the period between February 15, 2019 through August 2, 2019.  This case has been filed in the USDC – NJ.

The complaint alleges that during the Class Period, defendants made materially false and misleading statements and/or failed to disclose adverse information regarding Prudential’s business and prospects. Specifically, defendants failed to disclose the following facts: (a) the Company’s reserve assumptions failed to account for adversely developing mortality experience in its Individual Life business segment; (b) the Company was not over-reserved, but instead, its reported reserves, particularly for the Individual Life business segment, were insufficient to satisfy its future policy benefits liabilities; and (c) the Company had materially understated its liabilities and overstated net income as a result of flawed assumptions in calculating mortality experience. As a result of this adverse information being withheld from the market, the price of Prudential common stock was artificially inflated to more than $105 per share during the Class Period.

On July 31, 2019, the Company announced disappointing second quarter 2019 financial results, including earnings per share of $3.14, which missed analyst consensus estimates by $0.09, and disclosed that the Company would take a pre-tax charge of $208 million as a result of its market experience update. In the earnings release, Prudential’s CEO acknowledged that changes in “mortality assumptions” had negatively impacted the Company’s results and would “trim” near-term momentum.

On August 1, 2019, the Company held a conference call to discuss its second quarter 2019 financial results. On the call, defendants revealed that the change in mortality assumptions would require a negative earnings impact of $25 million per quarter for the foreseeable future, wiping out approximately one third of the earnings attributable to the Individual Life business segment. As a result of these disclosures, Prudential’s stock price declined more than 10% to close at $91.09 per share on August 1, 2019.

Then on August 2, 2019, Prudential filed its quarterly report on Form 10-Q with the SEC for the second quarter of 2019, which provided additional information concerning the Company’s adjustments to operating income by segment, including that the $208 million pre-tax charge to reserves was entirely attributable to the Individual Life business segment. As a result of these further negative disclosures, Prudential’s stock price declined another 5.6%, falling to $88.56 per share on August 2, 2019 and to $85.95 per share on August 5, 2019.