In a long-awaited move, the Securities and Exchange Commission and New York Attorney General Eliot Spitzer have settled their first variable annuity market timing case. The agency has charged subsidiaries of Conseco and Inviva, which bought Conseco’s variable annuity business, with securities fraud.

Both companies knowingly sold its Monument and Advantage Plus variable annuities to hedge funds intent on market timing despite the fact that the prospectuses stated that the annuities were not for timers. Furthermore, the companies also offered a separate product explicitly designed for market timing but did not insist that the hedge funds invest in that product.

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