Prudential to close equity research, trading group

Insurance and money management giant Prudential announced Wednesday that it will close its 420-position research and trading unit.

Prudential said it would take a $72 million after-tax charge to accommodate the change, which includes employee severance, and related costs.

Prudential said the research and trading operation did not produce a large enough success to warrant continuation, Prudential Spokeswoman Theresa Miller told The Associated Press. The research and trading unit had reported 2006 revenue of $260 million, a small slice of Prudential's $32.5 billion 2006 revenue.

Prudential Financial Inc. (NYSE: PRU) shares were down $1.17 to $99.40 in Wednesday afternoon trading.
Analysts said Prudential's operation had to rely on institutional equity commission revenue, without a full-scale retail sales operation -- a decided operational disadvantage. Moreover, smaller margins and an abundance of well-capitalized research and equity brokerage players have created market conditions that require full-scale efforts for an organization to secure a slice of what has become an increasingly contested space.

Prudential said it would close offices and trading operations in nine U.S. cities, and in London, Paris, Zurich, and Tokyo, as part of the move.