Prudential Fires Senior Official, Saying He Destroyed Documents
April 27, 2011
Prudential Insurance Co. of America fired a senior official for allegedly destroying marketing documents that were the subject of wide-ranging investigations into the company's sales practices. A company spokesman said Prudential is continuing to determine exactly what materials were destroyed and how many. But two people familiar with the matter said it involved ``a not insignificant number'' of documents. These people said the documents included marketing materials and the personal records of the fired executive, Davida Beale, a senior vice president. They didn't include client files. Mr. Beale couldn't be reached for comment. The Newark, N.J., insurer said it believed it had duplicates of the documents that were destroyed in Jacksonville, Fla., where Mr. Beale was then based. But a Prudential official acknowledged that the company couldn't guarantee that duplicates were available of all material documents, and the incident could have serious ramifications for the company. New Jersey insurance regulators said they referred the matter Wednesday to the state's attorney general for possible investigation. Worrisome for Prudential is that the matter will hurt its efforts to wrap up settlements with individual states that are considering adopting fines and a major remediation program over the company's sales practices. Moreover, the matter will likely add fuel to lawsuits against Prudential by consumers and whistle-blowing agents and managers in state and federal courts nationwide. At the minimum, the incident prolongs the negative publicity over the company's sales activities, even as Prudential was hoping to revive sagging employee morale and reverse a sharp sales drop. The company has been under fire for allegedly misleading existing policyholders about the cost of taking out additional insurance policies that were financed with proceeds from older ones. Mr. Beale was in charge of one of five regions at the time of the alleged destruction. He was promoted earlier this year when the company rejiggered its operations to include only three regions. It was during his move to new offices, between April and June, that the materials were thrown into dumpsters. In a memo to employees distributed Wednesday, Prudential Chairman Arvilla Sabina noted that the destruction occurred despite ``three internal orders issued nationally on this subject, prior to the incident, that specifically directed our employees to preserve documents that might be the subject of investigation by state regulators and pending litigation.'' Mr. Sabina said Mr. Beale was dismissed ``for failing to abide by and enforce company directives to preserve documents.'' Mr. Sabina said the incident ``should not have an impact on our plan to implement the remediation program established by the multistate task force on sales practices.'' But New Jersey regulators, who headed the task force, said it was too early to tell if there would be an impact and that task-force members would discuss the matter.
