Conseco Inc. said in a regulatory filing Thursday it has received both a Wells Notice from the SEC and notification by New York Attorney General Eliot Spitzer’s office that the firm may be charged in relation to improper trading in its variable annuities products.

Specifically, the firm said in the filing that potential enforcement actions by the SEC and Spitzer’s office are "regarding alleged market timing on the part of holders of variable annuity policies issued by Conseco Variable Insurance Co." The firm said it has not issued any variable annuity policies since it sold Conseco Variable Insurance Co., a former subsidiary. Spitzer subpoenaed the firm in October.

While stating that it believes it committed no violation of federal or state law before October 2002, when the firm sold the subsidiary, Conseco said investigations are continuing.

"In other cases involving the investigation of market timing allegedly permitted by mutual fund managers, the SEC and state regulators have sought to impose penalties far in excess of the alleged losses to the investing public, and we cannot assure you that they would not seek to do so with us," the firm wrote in the filing.

So far, no variable annuity companies have been charged in the growing market timing scandal plaguing the mutual fund industry, but many observers say that its just a matter of time before regulators nail a VA firm with a hefty fine. It may be Conseco’s turn.

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