NEW YORK, Jan. 18, 2020 /PRNewswire/ -- Pomerantz LLP announces that a class action lawsuit has been filed against Prudential Financial, Inc. ("Prudential" or the "Company") (NYSE: PRU) and certain of its officers. The class action, filed in United States District Court, for the District of New Jersey, and docketed under 20-cv-00545, is on behalf of a class consisting of investors who purchased or otherwise acquired the securities of Prudential between February 15, 2019 and August 2, 2019, inclusive (the "Class Period"), seeking to recover damages caused by Defendants' violations of the federal securities laws and to pursue remedies under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the "Exchange Act") and Rule 10b-5 promulgated thereunder, against the Company and certain of its top officials.
If you are a shareholder who purchased Prudential securities during the class period, you have until January 27, 2020 to ask the Court to appoint you as Lead Plaintiff for the class. A copy of the Complaint can be obtained at www.pomerantzlaw.com. To discuss this action, contact Robert S. Willoughby at [email protected] or 888.476.6529 (or 888.4-POMLAW), toll-free, Ext. 9980. Those who inquire by e-mail are encouraged to include their mailing address, telephone number, and number of shares purchased.
Prudential describes itself as providing a wide range of insurance, investment management, and other financial products and services to both individual and institutional customers throughout the U.S. and in many other countries.
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, after the close of the market, Prudential issued a press release announcing its financial results for the second quarter of 2019. The Company's financial results included EPS of $3.14, which missed analyst consensus estimates of $3.23 by $0.09. In addition, the Company reported it would take a pre-tax charge of $208 million as a result of its market experience update and that the Individual Life business segment had lost $135 million, but did not provide information concerning the impact of the revised mortality assumptions on the Company's financial performance going forward.
On August 1, 2019, Prudential held a conference call (with presentation slides) for analysts and investors to discuss the Company's second quarter 2019 financial results, including the $208 million charge to earnings because of changes in mortality assumption, which was entirely attributable to the Individual Life business segment. On the call, Defendants noted the impact of the change in mortality assumptions on the Company's quarterly results.
Following Defendants' prepared remarks, analysts sought further details regarding the surprise earnings miss, the reserve charge in the Individual Life business segment attributed to the changed mortality assumptions, including its impact during future periods, and why the Company was not updating guidance despite indicating the negative future financial impact of the reported results. Even more significant, Defendants explained 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.
On August 1, 2019, J. P. Morgan issued a report on Prudential and its second quarter 2019 results, titled "2Q Results Poor, 3Q Guidance Atrocious," which described the Company's second quarter results as "poor" and its "EPS guidance [as] even worse."
Also on August 1, 2019, Evercore ISI issued a report on the Company's second quarter results, titled "A Challenging Quarter," noting the significance of the "forward earnings drag expected" as a result of the changed mortality assumptions in the Individual Life business segment. Evercore also noted that the slides accompanying the conference call contained a new revelation that the Company was seeking to reinsure certain blocks of its Individual Life business segment.
As a result of these disclosures, including the $208 million reserve charge, the earnings miss, the negative $25 million earnings impact in each quarter for the foreseeable future, and the implied reduction in guidance, Prudential's share price declined more than 10%, from a close of $101.31 per share on July 31, 2019 to a close of $91.09 per share on August 1, 2019, on massive volume of more than 7.6 million shares traded.
On August 2, 2019, Prudential filed with the Securities and Exchange Commission its quarterly report on Form 10-Q for the second quarter of 2019, which provided additional details concerning the Company's adjustments to operating income by segment. As set forth in the Form 10-Q, the Individual Life business segment performed $178 million worse in the second quarter of 2019, as compared to second quarter of 2018, primarily due to the $208 million reserve charge from the annual review.
As a result of these further negative disclosures in the Form 10-Q, Prudential's share price declined another 5.64%, from a close of $91.09 per share on August 1, 2019, to $88.56 per share on August 2, 2019, and to $85.95 per share on August 5, 2019 (the next trading day), on massive volume of more than 4.2 million shares traded on each of August 2, 2019, and August 5, 2019.
On August 6, 2019, Deutsche Bank issued a report, titled "Lowering Estimates Post Earnings," which revealed that Prudential's Investor Relations had been in communication with sell-side analysts concerning their financial models for the Company and, as a result, Deutsche Bank was reducing its fiscal year 2019 EPS guidance for Prudential by more than 4% to $12.25.
These continuing disclosures revealing Prudential's true financial condition caused its share price to continue to decline, from a close of $86.23 per share on August 6, 2019 to a close of $85.17 per share on August 7, 2019, and to below $83.00 per share by August 15, 2019.
The Pomerantz Firm, with offices in New York, Chicago, Los Angeles, and Paris is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, the Pomerantz Firm pioneered the field of securities class actions. Today, more than 80 years later, the Pomerantz Firm continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members. See www.pomerantzlaw.com.
Robert S. Willoughby
SOURCE Pomerantz LLP