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UK's Prudential Fined $45 Million for Hiding AIA Bid Plans

Chris Ratcliffe | Bloomberg | Getty Images

Prudential , Britain's largest insurer, has been fined 30 million pounds ($45.5 million) for failing to tell the UK financial regulator about its ill-fated takeover attempt of Asian rival AIA around three years ago.

The Financial Services Authority (FSA) said on Wednesday the size and scale of the deal would have transformed the company's financial position, strategy and risk profile and that a planned 14.5 billion pound cash call would have been the biggest ever in the UK.

"Prudential failed to deal with the FSA in an open and cooperative manner when it was seeking to acquire AIA in early 2010, because it did not inform the FSA of the proposed acquisition until after it had been leaked to the media on 27 February 2010," the FSA said.

The deal collapsed after Prudential's investors baulked at the price and AIA's parent, U.S. insurer AIG , rejected a lower offer. Prudential shareholders were left shouldering 377 million pounds in costs, prompting calls for the heads of Chief Executive Tidjane Thiam and former chairman Harvey McGrath.

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The FSA said Thiam played "a significant role" in the decision not to contact the FSA about the company's Asian expansion plans and that he was "knowingly concerned in this breach". But the regulator stopped short of declaring him unfit.

Prudential said it regretted, with hindsight, not informing the FSA earlier about its Asian plans. But it emphasised that the investigation was into past events, did not concern current conduct and that the FSA did not consider its breaches "reckless or intentional".

"We wish to draw a line under the matter, and to ensure our constructive relationship with our regulators remains good," Prudential Chairman Paul Manduca said in a statement.

"Tidjane acted at all times in the interests of the company and with the full knowledge and authority of the board. The board wishes to express its satisfaction that all parties have agreed to this settlement."