SEC Division of Corporation Finance no-action letter: Prudential Financial, Inc.

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
DIVISION OF
CORPORATION FINANCE
September 4, 2008
Edwin G. Schallert, Esq.
Debevoise & Plimpton LLP
919 Third Avenue
New York, NY 10022
Re: Prudential Financial, Inc.-Waiver Request under Regulation A and Rule 505 of Regulation D Dear Mr. Schallert:
This is in response to your letter dated today, written on behalf ofPrudential Financial, Inc. ("Prudential") and constituting an application for waiver relief under Rule 262 ofRegulation A and Rule 505(b)(2)(iii)(C) ofRegulation D under the Securities Act of 1933. You requested waiver relief from disqualifications from exemptions otherwise available under Regulation A and Rule 505 ofRegulation D that may arise as a result of the entry of a Final Judgment dated today by the United States District Court for the District ofNew Jersey permanently enjoining and restraining Prudential from violations ofSections 13(a), 13(b)(2)(A), and 13(b)(2)(B) ofthe Securities Exchange Act of 1934 and Rules 12b-20, 13a-l, 13a-ll and 13a-13 promulgated thereunder (the "Final Judgment"). For purposes ofthis letter, we have assumed as facts the representations set forth in your letter and the findings supporting entry ofthe Final Judgment. We also have assumed that Prudential will comply with the Final Judgment. On the basis ofyour letter, I have determined that you have made a showing of good cause under Rule 262 and Rule 505(b)(2)(iii)(C) that it is not necessary under the circumstances to deny the exemptions otherwise available under Regulation A and Rule 505 ofRegulation D by ryason ofthe entry ofthe Final Judgment. Accordingly, pursuant to delegated authority, I hereby grant a waiver from the disqualifying effects ofthe Final Judgment to Prudential and its affiliates under Rule 262 ofRegulation A and Rule 505(b)(2)(iii)(c) ofRegulation D. Very truly yours, ~~J/~ Chief, Office ofSmall Business Policy

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DEBEVOISE 919 Third Avenue 0. PLIMPTON LLP N~w York. NY 10022 Tel 212909 6000 www.delxvoi.IC..com Edwin G. ScluJlen Parmer Tel 212 909 629'; Fax 112 909 6836 rgschall~rt@t1~bC'Voise.com September 4, 2008 VIA FIRST CLASS MAIL AND E-MAIL Gerald 1. Laporte, Esq. Chief, Oftlce of Small Business Policy Division of Corporate Finance U.S. Securities and Exchange Commission 100 F Street, N.E., 3rd Floor Washington, D.C. 20549-3628 Securities and Exchange Commission v. Prudential Financial, Inc. Dear Mr. Laporte:
This letter is submitted on behalfofour client, Prudential Financial, Inc. ("Prudential"), the settling respondent in the above-captioned civil proceeding. Prudential hereby requests, pursuant to Rule 262 ofRegulation A and Rule 505(b)(2)(iii)(C) of Regulation D of the Securities and Exchange Commission (the "Commission") promulgated under the Securities Act of 1933 (the "Securities Act"), waivers of any disqualifications from exemptions under Regulation A and Rule 505 of Regulation 0 that may be applicable to Prudential or any ofits affiliates as a result ofthe entry of a Final Judgment on Consent (the "Final Judgment"), which is described below. Prudential requests that these waivers be granted effective upon the entry ofthe Final Judgment. It is our understanding that the Staff of the Northeast Regional Office does not object to the grant ofthe requested waivers. BACKGROUND The Staffofthe Northeast Regional Office engaged in settlement discussions with Prudential in connection with the above-captioned civil proceeding, which was brought pursuant to Section 21 (d)(l) ofthe Securities Exchange Act of 1934 ("Exchange Act"). As a result ofthese discussions, Prudential submitted an executed Consent ofDefendant (the "Consent") that was presented by the Staff to the Commission. In the Consent, solely for the purpose of proceedings brought by or on behalfof the Commission or in which the Commission is a party, Prudential agreed to consent to the entry of the Final Judgment, without admitting or denying the allegations contained in NewYork • Washington. D.C. • London • Paris • Frankfurt • Moscow • Hong Kong • Shanghai

Gerald J. Laporte, Esq. 2 September 4,2008 the above-captioned Complaint (other than those relating to the jurisdiction ofthe Commission, which are admitted). The Final Judgment, which was entered September 3, 2008, concerns Prudential's inaccurate recording of income for 2000, 2001 and 2002 in the consolidated financial statements included in its periodic filings for the years 2001 and 2002. The inaccuracies in the financial statements related to recorded income from a series of reinsurance contracts entered into from 1997 to 2002 between the General Reinsurance Company (Gen Re) and Prudential's former Property and Casualty subsidiaries, The Prudential Property and Casualty Insurance Company and The Prudential Property and Casualty Insurance Company ofNew Jersey (the "Prupac companies"). Prudential divested itselfofthe Prupac companies in the fourth quarter of
2003. As a result ofthe inaccurate statements, the Final Judgment permanently restrains
and enjoins Prudential and its officers, agents, servants, employees, and all persons in active concert or participation with them who receive actual notice ofthe Final Judgment from committing or causing any violations and any future violations ofSections 13(a), l3(b)(2)(A), and 13(b)(2)(B) ofthe Exchange Act or Rules l2b-20, 13a-l, 13a-ll and 13a-13 promulgated thereunder. DISCUSSION Prudential understands that the entry ofthe Final Judgment may disqualify it and any affiliated issuer from relying on certain exemptions under Regulation A and Rule 505 ofRegulation D promulgated under the Securities Act, insofar as the Final Judgment may be deemed to cause Prudential or the issuer to be subject to an "order, judgment, or decree ... pennanently restraining or enjoining [it] from engaging in or continuing any conduct or practice in connection with the purchase or sale of any security or involving the miling of any false filing with the Commission." See 17 C.F.R. §§ 230.262(a)(4). Prudential is also concerned that, should Prudential be deemed to be acting as a person within the scope ofSecurities Act Rule 262(b), the Final Judgment may be deemed to be a disqualifying order, judgment or decree with respect to Prudential for the purposes of Securities Act Rule 262(b)(2). The Commission has the authority to waive the Regulations A and D exemption disqualifications upon a showing of good cause that such disqualifications are not necessary under the circumstances. See 17 C.F.R. §§ 230.262 and 230.505(b)(2)(iii)(C). Prudential requests that the Commission waive any disqualifying effects that the Final Judgment may have under Regulation A and Rule 505 of Regulation D with respect to Prudential or its affiliates on the following grounds:

1. Prudential's conduct addressed in the Final Judgment and alleged in the
   Complaint does not pertain to Regulation A or D.
2. The disqualification ofPrudential or Its affiliates from the exemptions
   under Regulations A and Rule 505 of Regulation D would be unduly and disproportionately severe given the nature ofthe violation addressed in the Final 22726925

Gerald J. Laporte, Esq. 3 September 4, 2008
Judgment and the extent to which disqualifIcation may affect the business operations of Prudential or its affiliates by impairing their ability to issue securities or act in other capacities pursuant to these exemptions to raise new capital or for other purposes.
3. The disqualification ofPrudential or its affiliates from the regulatory
exemptions would be unduly and disproportionately severe given the nature ofthe violation addressed in the Final Judgment and the extent to which disqualification may place Prudential or its affiliates at a competitive disadvantage with respect to third parties that might seek to invest in securities in transactions that rely on the regulatory exemptions.
4. The disqualification ofPrudential or its affiliates from the exemptions
under Regulation A and Rule 505 of Regulation D also would be unduly and disproportionately severe~ given that the Final Judgment fully addresses the activity alleged in the Complaint through its injunctive relief. In light of the grounds for relief discussed above, we believe that disqualification is not necessary, in the public interest, or for the protection of investors, and that Prudential has shown good cause that relief should be granted. Accordingly, we respectfully urge the Commission to waive, effective upon the entry of the Final Judgment, the disqualification provisions in Regulation A and Rule 505 of Regulation 0 to the extent they may be applicable to Prudential or its affiliates as a result ofthe entry ofthe Final Judgment. If you have any questions regarding this request, please contact me at 212-909-6295. Sincerely, Edwin G. Schallert 22726925