American Skandia -- Market Timing


STOCKHOLM, Sweden, Oct. 26, 2004 (PRIMEZONE) -- Skandia: Financial institutions in the United States have come under the scrutiny of the U.S. Securities and Exchange Commission, the New York Attorney General's Office and certain other U.S. regulators in connection with certain practices involving mutual funds and variable annuity contracts. Specifically, several U.S. mutual fund companies and insurance companies have been accused of allowing, among other things, frequent trading, or "market timing", in mutual funds and variable annuity contracts, which may be harmful to the interests of other investors.

Although Skandia is no longer active in the mutual fund or variable annuity businesses in the United States, Skandia's former subsidiary American Skandia Life Assurance Corporation and its affiliates were active in these businesses. American Skandia was purchased by Prudential Financial, Inc. in 2003.

As previously disclosed, Prudential Financial has advised Skandia that Prudential Financial, like many others in the industry, has received formal requests for information from regulatory authorities in the US. Some of the requests to Prudential Financial relate to American Skandia, and Prudential Financial has advised that it is fully cooperating with these regulators.

The U.S. Securities and Exchange Commission and the State of New York Attorney General's Office are investigating issues relating to market timing in American Skandia's investment products. Based on recent discussions with the authorities, Skandia believes these matters are likely to lead to proceedings and/or settlement. The outcome of any settlement would likely result in payment of damages, and may also result in fines. At this moment it is not possible to estimate the financial impact on Skandia.

The agreement for the purchase of American Skandia by Prudential Financial provides that Skandia will indemnify Prudential Financial for claims, investigations, lawsuits and other matters, subject to an overall limitation of 1 billion USD. In respect of governmental actions, notice of certain claims must be provided by Prudential Financial before May 1, 2007. Amounts paid for any damages, fines, or costs that may arise out of the matters referenced above in relation to American Skandia prior to its purchase by Prudential Financial would be subject to indemnification claims from Prudential Financial.

This information was brought to you by Waymaker http://www.waymaker.net

The following files are available for download:

http://www.waymaker.net/bitonline/2004/10/26/20041026BIT20070/wkr0001.pdf



            

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