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Up Front: STREET NEWS
HEY, LET'S ALL SUE PRU!
PRUDENTIAL SECURITIES IS even under attack from brokers. In a just-filed class action, a former Pru broker says the firm's misleading sales claims for its disastrous limited partnerships have hurt his ability to make a living in the securities business.
It's rare to find brokers suing a firm for allegedly lying to them that an investment product they sell is not risky. William Mandel of Boca Raton, Fla., says he got his clients to buy nearly $2 million worth of the limited partnerships. Since the partnerships' collapse in the early 1990s, he has lost at least $400,000 in income from an "impaired reputation and lost business relationships," the lawsuit claims. Today, Mandel, 43, works as a Dean Witter broker. His lawyer, Thomas Hoadley, says some 75 ex-Prudential brokers are interested in either joining the class action or filing parallel suits.
That's bad news for Pru, which has already put $660 million aside to pay off investors who lost money in the partnerships as part of broad securities fraud settlements. The firm pitched 700 land and energy ventures, totaling nearly $8 billion. A company spokesman characterizes the broker's legal action as "a frivolous suit that is without merit." EDITED BY LARRY LIGHT WITH RUTH COXETER By Michael Schroeder