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Regulation and Compliance > Federal Regulation > SEC

Jefferson National Reports Market Timing Probe

By Jim Connolly

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Jefferson National Life Insurance Company, Louisville, Ky., says it is being investigated for potential market timing and late trading activities related to its variable annuities.

In a May 4 filing, the company, a unit of Inviva, New York, says it is under investigation by both New York Attorney General Eliot Spitzer and the Securities and Exchange Commission.

The SEC declined comment. A spokesperson for Spitzer says his office is looking at a number of companies selling VAs on such issues as market timing. The spokesperson declined comment on Jefferson National.

Deborah Newman, a spokesperson for Jefferson National, says the company is cooperating fully with the SEC and other regulators but declined comment on the inquiry.

In its filing with the SEC, Jefferson National says that since November 2003, the New York AG and the SEC have been informally investigating it. The insurer also says “it is impossible to predict their outcome and whether or not the company will incur any loss, material or otherwise.”

Jefferson National adds that it has not established any loss reserves pending the outcome of these investigations.

It further says that on March 12, it received a Wells notice from the SEC stating that the agencys staff is considering a recommendation to file a civil injunction action for alleged violations of various securities laws. Jefferson National says it was told orally that “the action was based on alleged market timing activity that was processed through variable annuity contracts issued by Jefferson National.”

The company also says the New York AGs office had orally told management it is considering a similar action.

Jefferson National says it responded to the Wells notice on March 23, presenting its views on why no action was needed.

The company was previously a unit of Conseco but was sold to Inviva on Oct. 1, 2002.

Reproduced from National Underwriter Edition, May 7, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

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