Home » Broker Blog » Pruco Securities

Pruco Securities

Kurta Law wants investors to be aware of the regulatory actions on Pruco Securities’ FINRA BrokerCheck record. Investors should also review the firm’s conflicts of interest and how those may affect broker recommendations.

Pruco Securities (CRD #: 5685) serves as the brokerage firm for Prudential Financial. It is affiliated with Prudential Financial Planning Services, which provides investment advisory services. In 2023, Pruco Securities announced it would transfer its financial professionals and advisory business to LPL Enterprises. The Customer Relationship Summary states this transfer should be completed by the end of 2024. Regulators must approve the transfer before finalization.

Brokerage Services

Pruco Securities advises its customers: “Other firms could offer a wider range of [investment] choices, some of which might have lower costs.”

Pruco Securities broker may recommend the following products, some of which come with significant risks for investors.

Variable Life Insurance
Variable Annuities
Mutual Funds
Exchange-Traded Funds
Stocks and bonds
Options
Brokerage CDs
529 Plans

Brokerage Firm Fees and Conflicts of Interest

Investors should know how brokers make money on investment products, as these payments naturally create a conflict of interest. These are the conflicts of interest disclosed in Pruco Securities’ Customer Relationship Summary (Form CRS).

Proprietary Products – Brokers earn more commission on products issued by Prudential affiliates.
Certain third-party products feature revenue-sharing agreements with Pruco. Ask your broker about which products share revenue with the firm.
Mutual Funds: Pruco’s mutual funds come with 12b-1 fees that offer payments for Pruco.

Other Financial Incentives / Conflicts of Interest to Consider:

Investment advisory accounts offer a greater financial benefit for Prudential. Ask your broker if you should choose a brokerage account or an advisory account as well as what fees you can expect to pay.

New products may offer bigger commissions for Pruco brokers, which gives brokers the incentive to recommend that you purchase new products instead of holding onto existing investments.
The firm earns less if you withdraw from an investment advisory account rather than take out a loan or invest using a margin account.
Affiliates may provide your Pruco broker with bonuses, retirement benefits, expense reimbursement, marketing support, and conferences.

Regulatory Actions

Pruco Securities customers should be aware of the regulatory allegations on its record. Kurta Law has highlighted the following actions, but you can review the complete list of 44 disclosures on its detailed BrokerCheck record.

$2.5 million SEC Fine Following Allegations Related to Wrap Fees, Revenue Sharing, and Mutual Funds

On December 23, 2020, the SEC imposed a $2.5 million fine for the following allegations:

Failed to conduct appropriate monitoring to determine if wrap fee programs continued to be suitable for certain clients.
Charging certain fees contrary to its disclosures.
Recommending that clients purchase and hold certain mutual funds that charge 12b-1 fees without disclosing their conflict of interest to their clients.
Failing to disclose revenue-sharing payments on client investments.
Violating its duty to recommend mutual fund share classes that offer discounts instead of more expensive mutual funds.

In addition to the $2.5 million fine, the SEC ordered Pruco Securities to pay a disgorgement (refund to customers) of $12,690,585 and prejudgment interest of $3,061,786.

$750,000 Fine from Illinois Regarding Variable Annuity Applications

On April 20, 2017, Illinois alleged that Pruco Securities failed to reasonably supervise its representatives. This failure allegedly caused the approval of certain variable annuity applications which should have met with further scrutiny before approval. Pruco Securities also allegedly failed to adequately respond to requests from the Illinois state securities regulator regarding variable annuity transactions with Illinois residents.

As a result of these allegations, Pruco Securities consented to pay a $750,000 fine, plus restitution to impacted customers.

$40,000 New Jersey Fine Regarding Paper Orders for Mutual Funds

On December 14, 2012, the New Jersey Bureau of Securities alleged that Pruco Securities’ supervisory system was inadequate to ensure customers who submitted paper orders to mutual fund transactions received the correct price.

Additionally, Pruco Securities allegedly failed to have written procedures for the pricing of mutual fund orders, particularly orders received and completed before 4 p.m.