Moody's affirms Prudential

Moody's Investors Service said it affirmed the A3 senior unsecured debt rating of Prudential Financial, Inc. following the announcement of settlements totaling $600 million between Prudential subsidiary Prudential Equity Group LLC and the Securities and Exchange Commission, the U.S. Department of Justice, the New York Attorney General's Office and various stock exchanges and state securities regulators related to deceptive mutual fund market timing activities at the former Prudential Securities, Inc.

The outlook is stable.

Moody's said that the immediate financial impact of the settlements to Prudential is manageable, as Prudential Equity Group has already established reserves for the total settlement amount, which includes a $270 million restitution fund and $330 million in fines and penalties. The agency also said the settlements help to eliminate the uncertainty regarding Prudential's standing with a number of legal and regulatory agencies over market timing allegations.

Nevertheless, Moody's noted that Prudential continues to face adverse publicity and additional legal risks related to market timing. Under the settlement with the U.S. Department of Justice, Prudential Equity Group has accepted responsibility in connection with deceptive market timing activities and is paying a large monetary penalty. Moreover, the settlement documents include findings and admissions that may adversely affect existing litigation or cause additional litigation for the company.

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