Prudential Financial Inc.'s
troubles could be rubbing off on American Skandia. Today, the company said the SEC is investigating its mutual fund business, according to Dow Jones Newswires.
The company also announced that it has been named a defendant in a class action lawsuit filed last week in the US District Court for the Southern District of New York, representing shareholders of the INVESCO funds against the managers of the INVESCO funds.
The complaint alleges that customers of American Skandia were permitted to engage in late trading and/or market timing in the INVESCO mutual funds.
In a statement, Skandia said that it has not had a chance to review the case, but will defend itself if PRU notifies Skandia that it will seek indemnification in the event it incurs expenses in connection with this matter.
Also in the statement, Skandia noted that although it is no longer active in the mutual fund or variable annuity industries in the United States, it has undertaken certain obligations to indemnify Prudential Financial in connection with events that occurred prior to its sale to PRU last year.
The company has also received a request for information from New York Attorney General Eliot Spitzer's office regarding its variable annuity business.
Prudential has warned that these inquiries could lead to regulatory proceedings that could result in fines or other sanctions as well as civil litigation. However, PRU said that because of the 'scope of the internal review and the uncertainties of potential regulatory proceedings and civil litigation, it isn't able to estimate American Skandia's potential exposure, if any, at this time.
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