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"I believe we had an extremely serious problem but not a pervasive one," said Warren Buffett, the country's richest man and a great stock picker, brought in by Salomon to handle its damage control. The Sears version went as follows: "We strongly believe that these instances were isolated and there has been no pattern of this conduct." Sears also said, "In the automotive business, mistakes can and will occur."
"Certain limited partnerships," wrote Wick Simmons, the CEO at Prudential Securities, "were sold by our firm to some clients that lacked adequate information or were not suitable for their investment needs. That was wrong."
Mr. Simmons' statement in no way captures the anguish of the long list of claimants in the class actions who found their losses not suitable to their investment need. But it's notable for its use of the word wrong, which comes perilously close to the confession Prudential sidestepped with the SEC.
No doubt the legal department okayed this wording, and since then the company has followed up this exploratory mea culpa with an entire ad campaign called Straight Talk. The ads are filmed in black and white and resemble old Bergman movies, but the characters are not actors. They are living stockbrokers and other Prudential employees, including Mr. Simmons, who appears in several. The camera gets so close you can almost count his fillings.
The goal of Straight Talk is to create a new Prudential self. But so far, the Straight Talk campaign is suffering from the Mrs. Macbeth problem. Every time the new self is trotted out, the sins of the old self come back to haunt | it. One ad had to be scrapped after a former Prudential client recognized the straight talker as the same broker who had sold him a limited partnership. The ex-client got mad all over again and filed a new lawsuit. Then a second ad was scrapped to protect yet another broker from being sued.
Prudential has spent $20 million to escape its past, and all it's doing is reminding people of it. Perhaps if Prudential had been able to make a full confession in the first place, it would have been better able to put these matters behind it. But the legal system makes that a bad bet. Did you see what happened just this month in a big discrimination case brought by women against AT&T? AT&T settled it without admitting or denying any wrongdoing.