The original Complaint charges Conseco and certain of its officers and directors with violations of sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and rule 10b-5 of the Securities and Exchange Commission. Among other things, plaintiff claims that defendants disseminated a series of materially false and misleading statements regarding problems with Conseco's liquidity and the Company's manufactured-homes financing business. The disclosure on the last day of the Class Period that the Company would miss certain bond payments caused the price of Conseco stock to drop 11.5%. The Complaint charges that defendants were in possession of materially adverse information about the Company's liquidity problems and manufactured-homes financing business but failed to fully disclose the information to investors, causing Conseco's stock price to become artificially inflated, inflicting damages on investors.
According to the Company’s Form 10-Q for the quarterly period ended June 30, 2006, after the Company’s Predecessor announced its intention to restructure on August 9, 2002, eight purported securities fraud class action lawsuits were filed in the United States District Court for the Southern District of Indiana. The complaints named Company as a defendant, along with certain of its former officers. These lawsuits were filed on behalf of persons or entities who purchased Company’s Predecessor's common stock on various dates between October 24, 2001 and August 9, 2002. The plaintiffs allege claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended and allege material omissions and dissemination of materially misleading statements regarding, among other things, the liquidity of Old Conseco and alleged problems in CFC's manufactured housing division, allegedly resulting in the artificial inflation of our Predecessor's stock price. On March 13, 2003, all of these cases were consolidated into one case in the United States District Court for the Southern District of Indiana, captioned Franz Schleicher, et al. v. Conseco, Inc., Gary Wendt, William Shea, Charles Chokel and James Adams, et al., Case No. 02-CV-1332 DFH-TAB. The complaint seeks an unspecified amount of damages. The plaintiffs filed an amended consolidated class action complaint with respect to the individual defendants on December 8, 2003. The Company’s liability with respect to this lawsuit was discharged in its Predecessor's plan of reorganization and the Company’s obligation to indemnify individual defendants who were not serving as an officer or director on the Effective Date is limited to $3 million in the aggregate under such plan. The Company’s liability to indemnify individual defendants who were serving as an officer or director on the Effective Date, of which there is one such defendant, is not limited by such plan. A motion to dismiss was filed on behalf of defendants Shea, Wendt and Chokel and on July 14, 2005, this matter was dismissed. Plaintiffs filed a second amended complaint on August 24, 2005. The Company filed a motion to dismiss the second amended complaint on November 7, 2005. James S. Adams filed for bankruptcy on July 29, 2005, Case No. 1:02-cv-1332-DFH-TAB (Southern District, Indiana).
On May 2, 2008, the plaintiffs filed a motion to certify the class. The motion was granted on March 20, 2009. On April 29, 2009, the defendants filed a notice of appeal regarding the class certification.
NOTE: While a party to this litigation at the time the original complaint due to its emergence from bankruptcy, Conseco is no longer a Defendant in this action.
On October 26, 2010, an Order Preliminarily Approving Settlement and Providing For Notice Of Proposed Settlement was issued by the Court describing the Settlement Agreement and Release dated as of October 12, 2010.
On February 17, 2011, the Court issued a Final Judgment and Order of Dismissal with Prejudice as to this case.