This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

The Deal: Prudential Doesn't Sue U.S.; Other 'SIFIs' Aren't Likely To Either

Stocks in this article: PRU PIMIX BRK.A

Other possible designees include Fidelity Investments, Vanguard Group and State Street's (STT) State Street Global Advisors.

The mega-insurer MetLife reported in July that the council is in the third stage of a three-stage designation review process with it.

The designation will eventually subject Prudential, which has more than $1 trillion of assets under management, to new capital and liquidity restrictions as well as obligations to write a so-called living will explaining how it will dismantle itself in a way that doesn't wreak havoc on the markets. However, specifications for most of those requirements have not yet been set so it remains unclear when the compliance burdens any firms designated as SIFIs will fully kick in.

Prudential on Friday said after careful review it won't seek to rescind the designation. Firms have 30 days from when they are designated to decide if they want to file a lawsuit challenging the decision.

Regulatory observers said they expect the council to designate other large financial institutions, including, possibly, big hedge funds, private equity firms and even large mutual fund managers, in the months and years to come.

Analysts and people familiar with the council's Prudential decision contend that the next firms to be designated are unlikely to follow up with judicial challenges in federal district court even though they are permitted to do so.

This is because the legal hurdles are almost insurmountable and even if they win their lawsuits the market will continue to believe that they could pose a risk to the financial system, they said.

Donald N. Lamson, partner at Shearman & Sterling LLC in Washington, said he expects that the general trend will be for designated financial institutions not to challenge their designation in judicial proceedings.

"The process is really stacked against the industry participant," Lamson said.

Lamson said that even if a company succeeds at overturning a designation in court, the market will continue to believe that it could pose a risk to the financial system. He added that even if a company wins in court there is no assurance that the FSOC will not come back and designate the firm the following year.

2 of 3

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,088.01 +57.80 0.32%
S&P 500 2,091.31 +9.43 0.45%
NASDAQ 4,808.5230 +35.0510 0.73%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs