Prudential has been fined £30 million ($43.8 million) and for failing to tell the UK Financial Services Authority (FSA) of its bid to buy AIG’s Asian life insurance business.

Group CEO Tidjane Thiam has also been censured. The insurer did not act in an “open and co-operative manner” until news of the deal appeared in the media, according to the regulator.

“Prudential should have informed the FSA at the earliest opportunity to allow the FSA to decide whether to approve or reject the deal on regulatory grounds,” Director of Enforcement and Financial Crime Tracey McDermott said.

“It failed to disclose the proposed transaction even when, at a meeting between the FSA and Prudential executives on February 12 2010, the FSA asked detailed questions about Prudential’s strategy for growth in the Asian market and its plans for raising equity and debt capital.”

Had the deal gone through, Prudential would have needed to raise £14.5 billion ($21.2 billion), the FSA says.

Such a rights issue, potentially the largest seen in the UK, could have affected the stability and confidence of the country’s financial system, according to the regulator.

“The failure to inform the FSA was significant because it resulted in the regulator having to consider highly complex issues within a compressed timescale before making a decision as to whether to suspend Prudential’s shares,” Ms McDermott said.

“It narrowed the FSA’s options in scrutinising the transaction, risked delaying the publication of Prudential’s subsequent rights issue prospectus and hampered the FSA’s ability to assist overseas regulators with their inquiries in relation to the transaction.”

The insurer and its CEO come in for scathing criticism from the regulator.

“The FSA considers that Prudential wrongly allowed its judgement to be overly influenced by its concern about the risk of leaks,” Ms McDermott said.

“This concern meant Prudential failed to give due weight to the importance of complying with its regulatory obligations, even when explicitly advised by its own advisers of the importance of keeping the regulator informed.

“Mr Thiam played a significant role, with others, in the decision not to contact the FSA about the proposed acquisition. Therefore, he was knowingly concerned in this breach.”

However, the regulator has stopped short of declaring Mr Thiam unfit to run a major insurer.

“This case should send a clear message to all board members of their collective and individual responsibility for the decisions they make on behalf of their companies,” Ms McDermott said.