The regulator rook action after Prudential failed to disclose that it was seeking to acquire AIA, an Asian subsidiary of insurer AIG in early 2010. The FSA said Prudential had failed to work in an open and cooperative manner until after news of the deal was published in the press.
The FSA has also censured Prudential’s group chief executive Tidjane Thiam, who it said ‘played a significant role’ in the decision not to contact the regulator regarding the transition.
The FSA added that although the breaches were serious it did not consider them intentional or reckless.
It said the size and scope of the deal would have changed the group’s financial position substantially and that the regulator had a responsibility to fully scrutinise the deal. The FSA added that the late disclosure resulted in it having to consider the deal in a ‘compressed timescale’.
Tracey McDermott, FSA director of enforcement and financial crime, said: “The FSA expects to have an open and frank relationship with the firms it supervises and with listed companies.
“It is essential that firms give due consideration to their regulatory obligations at all times. In particular, timely and proactive communication with the FSA is of fundamental importance to the functioning of the regulatory system and the integrity of the market.
“Prudential, led by Thiam as CEO, failed to give due consideration to its obligation to inform the FSA of this transaction, which would have had a huge impact on the group had it gone through. That was a serious error of judgement for which Prudential is paying the price.”
