Reset Font to Default Medium Font Larger Font

Frequently Asked Questions

For the following questions, "Conseco" refers to certain subsidiaries of public insurance company Conseco, Inc. (CIHC, Inc., Conseco Services, LLC, and Conseco Equity Sales, Inc.), "IDC" refers to the Independent Distribution Consultant, and "SEC" refers to the Securities and Exchange Commission.

 


1. How much will Conseco pay harmed investors?

Answer:

As part of its August 9, 2004 settlement with the Securities and Exchange Commission, Conseco paid the SEC $15 million to provide for distribution to harmed investors. Individual distribution payments to investors will vary based on their proportionate shares of losses, as calculated by the IDC.

2. What did Conseco do that required this settlement?

Answer:

Conseco permitted market timing in some of its variable annuity products even though the prospectuses prohibited such trading.  Making a false statement in a fund prospectus violated securities laws and caused harm to investors.

3. Who is paying for this settlement?

Answer:

The $15 million settlement was paid entirely by Conseco. In addition, all of the costs associated with the distribution of the settlement fund have been borne by Conseco.

4. Who is eligible to receive payment?

Answer:

Investors who held shares in certain affected variable annuity funds (the "Eligible Funds") from December 1, 1999 through October 22, 2002 are eligible to receive a distribution payment if it meets or exceeds the de minimis payment amount of $50 as provided in the Plan of Distribution. See the list of Eligible Funds provided on the home page of the website.

5. Will all harmed investors receive payments?

Answer:

No.  Only Eligible Investors whose payments meet or exceed the minimum payment constraint of $50 will receive payments.  For Eligible Investors who participated in Group Plans, Group Plan Administrators may choose to combine payments and allocate them to Group Plan participants in accordance with Section 6.4.2.4 of the Plan of Distribution.

6. What controls are in place to ensure that all investors received the distributions to which they are entitled?

Answer:

At each step in the calculation process, in-depth reviews and formal validations were conducted under the supervision of the IDC.

7. How were payments calculated?

Answer:

In general, distribution payments were calculated based on (i) the daily share balances held by all record owners in the affected funds during the relevant time period (December 1, 1999 through October 22, 2002) and (ii) loss amounts due to market timing in each affected fund as determined by the IDC using the methodology set forth in the Plan of Distribution.  Conseco and other insurance companies whose accountholders held affected variable annuity funds provided information to the IDC regarding share ownership in the funds.  For additional information, please refer to the Plan of Distribution.

8. Will a distribution payment from this settlement affect my taxes?

Answer:

For many investors, at least some portion of the distribution payment may be taxable income.  However, whether the distribution payment is taxable income depends on an investor's particular circumstances. Investors should consult a tax advisor and review the Statement to Eligible Investors ("SEI") to determine the federal income tax consequences of the distribution payment.

The SEI was prepared by the Tax Administrator appointed by the SEC for the Conseco Fair Fund and is provided for informational purposes only: it is not tax advice. It is intended to help investors and tax advisors determine (1) the extent to which a distribution payment will be taxable based on an investor's particular circumstances, and (2) the extent to which any taxable portion will be treated as capital gain or ordinary income. If investors have questions that are not addressed in that document, they should consult with a tax advisor to understand the tax consequences of the distribution payment.

The SEI is available on the Settlement Documents page of this website.

9. How is Conseco providing distributions to retirement plan administrators or plan sponsors?

Answer:

  • For 401(k) plans and other ERISA-qualified accounts where investor shares are held in trust by retirement plans, the distribution payments will be sent to the plan administrator or plan sponsor.
  • Distribution payments to such plan accounts are subject to minimum payment amounts (de minimis constraints as provided in the Plan of Distribution available on the Settlement Documents page on this website).
  • Plan administrators and plan sponsors have several options with respect to allocating these funds, including the right to apply the funds to cover plan expenses.  The administrators and sponsors determine whether and how to allocate funds to any plan participants in accordance with their legal, fiduciary, or contractual obligations, including any guidance from the U.S. Department of Labor, Field Assistance Bulletin No. 2006-01.

10. What are the responsibilities of the IDC? Do I need to take any action?

Answer:

The IDC, Dr. Roger Kormendi, Mr. Cyrus Gardner and Kormendi \ Gardner Partners ("KGP"), was approved by the SEC.  KGP's responsibilities include:

    • Developing a Plan of Distribution to distribute the $15,000,000 Conseco Fair Fund;
    • Submitting the Plan of Distribution for public comment and SEC approval;

    • Calculating distribution payments that Eligible Investors may receive;

    • Determining whether any person who files a dispute is entitled to a distribution; and,

    • Ensuring that the Plan of Distribution is properly executed.
There is no action necessary on your part to participate in the settlement.  As provided in the Plan of Distribution, the IDC reviewed your account information to determine if you were eligible to receive a distribution payment.

For additional information, please refer to the Plan of Distribution and/or the SEC Administrative Order.

11. What do I do if my check needs to be changed due to (i) a change in my IRA, (ii) a change in my tax-qualified retirement plan, or (iii) the accountholder is no longer living?

Answer:

There are several reissue request forms available on the Reissue Requests page of this website. Complete and submit the relevant reissue request form to the Conseco Fair Fund Administrator.

You may also call the Conseco Fair Fund Administrator at (800) 378-3615, Monday through Friday 9:00 a.m. - 6:00 p.m. Eastern Time.

12. My investment is/was in a tax-qualified retirement plan. What should I do with this check?

Answer:

How you handle the check varies depending on several issues, including the payee of the check and the status of the relevant tax-qualified retirement plan.  (Is the check made out to you or to a tax-qualified retirement plan?  Is your tax-qualified retirement plan active?  Are you still a participant in the tax-qualified retirement plan?)  Contact your plan trustee or administrator to discuss how to proceed.  For additional information, you may also call the Conseco Fair Fund Administrator at (800) 378-3615, Monday through Friday 9:00 a.m. - 6:00 p.m. Eastern Time.

13. The account referenced on the check is now closed. What are my options for depositing this check?

Answer:

If the original accountholder is now deceased, please complete and return the following form:

Reissue Request Form - Deceased Accountholder

If your original account is now closed, you may still be able to deposit this check as written. To review options for depositing or reissuing the check, click on the following link:

Accountholder Options for Closed Accounts

You may also contact the Fund Administrator at (800) 378-3615, Monday through Friday 9:00 a.m. - 6:00 p.m. Eastern Time.

14. Who serves as the Conseco Fair Fund Administrator?

Answer:

Rust Consulting, Inc. serves as the Fund Administrator as provided in the Plan of Distribution.  For more information about Rust Consulting, Inc., see:   http://www.rustconsulting.com/About

15. I still have questions. Whom may I contact?

Answer:

Please call the Conseco Fair Fund Administrator at (800) 378-3615, Monday through Friday 9:00 a.m. - 6:00 p.m. Eastern Time.

Disclaimer

Please do not contact CIHC, Inc., Conseco Services, LLC, Conseco Equity Sales, Inc., the IDC or the SEC about this settlement. Any and all callers will be directed to this website. If you have questions, please refer to the FAQs and the other information posted here.

This site is not operated by CIHC, Inc., Conseco Services, LLC, or Conseco Equity Sales, Inc. The settlement and website are supervised by the SEC and administered by a claims administration firm.

View the Privacy Policy