What Prudential Financial, Inc. told the SEC could break it.

Prudential and its distributors are subject to evolving standard-of-care/fiduciary rules (DOL fiduciary rule, SEC Regulation Best Interest, NAIC and Japanese FSA standards) that can require acting in customers' best interests and have raised — and may keep raising — compliance costs.

“The Company and our distributors are subject to rules regarding the standard of care applicable to sales of our products and the provision of advice to our customers, including, among others, the U.S. Department of Labor (“DOL”) fiduciary rule, the Securities and Exchange Commission (“SEC”) Regulation Best Interest, and the National Association of Insurance Commissioners (“NAIC”) and Japanese Financial Services Agency (“FSA”) Standard of Care regulations.”

Proposed pension-system reforms in Chile, Colombia, and Peru may limit the role of private companies and fundamentally change Prudential's business in those markets, while geopolitical tensions (e.g., China-Taiwan) could trigger sanctions affecting its operations.

“For example, pension system reforms being proposed in some jurisdictions (including Chile, Colombia and Peru) may limit the role of private companies, fundamentally changing our business in these markets.”

Prudential's most significant international insurance subsidiaries — Prudential of Japan and Gibraltar Life — are both domiciled in Japan and subject to FSA dividend restrictions, concentrating exposure to Japanese regulation, interest rates, and currency (its Japanese ops held $95.7B of USD-denominated investments).

“With respect to Prudential of Japan and Gibraltar Life, the Company's most significant international insurance subsidiaries, both of which are domiciled in Japan, Japan law provides that common stock dividends may be paid in an amount of up to 83 % of prior fiscal year statutory after-tax earnings, after certain reserving thresholds are met, including providing for policyholder dividends.”

Prudential faces uncertainty over the outcome and consequences of an investigation into, and remediation of, employee misconduct in its Japan operations — a named risk factor with potential financial and reputational impact.

“(16) uncertainty regarding the outcome and consequences of the investigation into and remediation of employee misconduct in Japan (see “Management's Discussion and Analysis—Results of Operations by Segment—International Businesses” for more information).”