The Rock is set to pay $600 million to settle charges arising out of New York Attorney General. Eliot Spitzer's investigation into mutual fund practices that began back in 2003. The settlement allows Prudential to avoid criminal prosecution and they represent the first company to settle in the wide-ranging market timing-related investigation.

A little background, via Bloomberg:

...Five former Prudential brokers and two branch managers in Boston were sued by the SEC and Massachusetts regulators for securities fraud in November 2003. Brokers used aliases to conduct short-term trades on behalf of seven hedge fund clients, driving up costs for the mutual funds' other shareholders, according to the complaints.

Using 183 accounts under phony names and identification numbers, the brokers made more than $3.2 million in net commissions from the trades between January 2001 and September 2003, according to the SEC. The group's ``success relied significantly on a lack of supervision by Prudential,'' the Massachusetts complaint said.

Martin Druffner, whom the government called the leader of one group, pleaded guilty in federal court last year to four counts each of wire fraud and securities fraud. Ex-broker Skifter Ajro also pleaded guilty last year to two counts each of wire and securities fraud. They haven't been sentenced.

Branch manager Robert Shannon pleaded guilty in May to a criminal charge of aiding and abetting securities fraud and was sentenced to three years of probation and a $5,000 fine...

With the settlement, Prudential has admitted that criminal acts were undertaken under the company's auspicies between 1999 and 2003. Prudential's $600 joins a host of other large scale settlements arising from the Spitzer (and related) investigations. Get more details on those past settlements and the structure of the Prudential fine, here.

-- MDT

Labels: Eliot Spitzer, New York AG