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Documentation provided by Tom Bakos, FSA, MAAA


The Structure of the ABCD

Documents Available

The Actuarial Board for Counseling and Discipline (ABCD) was established by the actuarial profession to enforce the profession's Code of Professional Conduct .  It does this by responding to members' requests for guidance and by considering complaints made regarding apparent violations by an actuary of the Code. 

More information regarding the ABCD can be found at its website: 
http://www.abcdboard.org/about/. 

ABCD Independence
Although the indication on the website is that the ABCD "was established by the U.S. actuarial organizations", the ABCD is actually an entity created by Article X of the Bylaws of the American Academy of Actuaries (AAA).  

While the Academy attempts to not infringe upon the operation or activities of the ABCD so as to maintain a sort of independence, it is difficult to claim actual independence because of the following:

ABCD members are appointed by CUSP, the Council of U.S. Presidents, a committee of the AAA Board.  Therefore, all CUSP members are also members of the AAA Board of Directors.

One of CUSP's specific duties is to "manage" the ABCD (as well as the ASB, the Actuarial Standards Board).

The ABCD is housed in the AAA offices in Washington, DC. and supported by AAA staff.

The ABCD General Counsel is the same as the AAA General Counsel (Mary Downs) who, currently, is also the AAA Executive Director.

The AAA is responsible for the budget and expenses of the ABCD which are paid for, essentially, by AAA member dues.

Application of the Code to Volunteer Work
This structure makes it particularly difficult for the ABCD to adjudicate on matters involving senior members or leaders in the U.S. actuarial professional organizations whose Codes it oversees.  This is exemplified by the Hartman/Anker example discussed in more detail below.

In addition, the Code of Professional Conduct appears to be written from the point of view of an actuary providing service to a client or employer.  It is, therefore, often difficult to match Code Precepts against volunteer work or a work product done for an actuarial professional organization.  Often members volunteering for this type of volunteer work either do not consider basic principles such as qualifications, confidentiality, or courtesy and cooperation or find it difficult to apply them in the context of their volunteer activity. 

In fact, many professional Boards or committees find it necessary to develop special Conflict of Interest policies because the Code Precept on Conflict, apparently, does not adequately address this principle in the context of volunteer work.

Growing Irrelevance of the ABCD
Clearly, this webpage presents facts as well as opinion.

It is my opinion that the ABCD is becoming less relevant to the actuarial profession as a disciplinary body.  I have provided some real life examples here to illustrate how I have arrived at this opinion.

I would appreciate comment from any reader in support of these opinions or who may feel that I have misread something or am being to harsh.

Tom Bakos, FSA, MAAA
last edited: 1/9/2010

  • Available on This Web Page Only
  • My 12/31/2009 Letter to ABCD addressing apparent ABCD inequity in its inquiries into matters involving Bruce Schobel

  • [new 5/13/2010] My 12/30/2009 Letter to ABCD requesting the reason for dismissal of my original complaint against Hartman/Anker (7/20/2009)

  • My 12/9/2009 letter to Tom Griffin responding to implications raised by his acknowledgement of my (11/4/2009 BLACKMAIL) Complaint below.

  • My 12/9/2009 letter to Tom Griffin pointing out my concerns with relevance of ABCD as a disciplinary body.

  • New ABCD Complaint against Hartman ( BLACKMAIL ) filed 11/4/2009.> In effect this converted my Request for Guidance regarding the question of blackmail which the ABCD ignored, into a formal complaint.

  • My 11/4/2009 Inquiry to Carol Sears requesting reasons for dismissal of my ORIGINAL complaint against Hartman et.al.

  • My 9/5/2009 Letter to ABCD (Curtis Huntington) bringing to the ABCD's attention the Academy Board's apparent violation of Academy Bylaws.


    Previously available on /Academy webpage
  • My ORIGINAL ABCD Complaint against Hartman, Anker, et. al. --- Filed 7/20/2009

  • ABCD Guidance Sought (7/20/2009) Re: RE: Apparent BLACKMAIL

  • My Request to ABCD for Guidance RE: apparent Code Violations by Academy Board

  • Hartman's 8-3-09 "New York Times" letter to Academy Board

  • Park's 7/1/2009 Letter to Academy Board
[Added 5/13/2010]

Status of Complaints Filed Against Bruce Schobel

Essentially identical complaints (claiming Bruce Schobel "defamed" Sarah Sanford) were filed on by Hartman, Boynton, & Crowder on June 12, 2009

It will be easier to understand this complaint and its disposition, in the context of a quick summary of its time line.

Time line

6/2 2/2009: Dave Hartman filed a complaint with the ABCD accusing Schobel of violating Precept 1 of the Code by "defaming" Sarah Sanford, former Executive Director of the SoA.  Hartman's complaint was based on conclusions reached by Arbitrators in the legal case Sanford v. SoA & Schobel.

Similar complaints were filed by Norm Crowder on June 24, 2009 and Edwin Boynton on June 25, 2009.

6/25/2009: Dave Hartman sent an email to Schobel in order to give Schobel an opportunity to "step aside" before Hartman sent a letter to the Academy Board, effectively, asking the Academy Board to remove Schobel as President Elect.

7/1/2009: On AAA stationary John Parks wrote on behalf of himself, Bill Bluhm, and Steve Lehmann (two past AAA Presidents) supporting Schobel and pointing out the fallacies in depending upon the Award of Arbitrators report (produced as a result of the Sanford v. the SoA & Schobel litigation) as a basis for concluding that "defamation" had actually occurred.

7/9/2009: Bob Anker sent via email the letter Hartman had composed (which was signed by 19 Past presidents of the Academy) to the Academy Board.  This letter cited the Arbitrators report as the only basis for the accusation made in the complaints filed by Hartman, Crowder, and Boynton and in the letter that Schobel had defamed Sarah Sanford.  

The 19 Past presidents who signed this letter were indicated to be:

Robert A. Anker
Thomas P. Bowles, Jr.
Edwin Boynton
Harold J. Brownlee
Charles A. Bryan
A. Norman Crowder, III
David G. Hartman
John H. Harding
M. Stanley Hughey
Allan M. Kaufman
Stephen L. Kern
Barbara J. Lautzenheiser
W. James MacGinnitie
Bartley L. Munson
Mavis A. Walters
Robert E. Wilcox
P. Adger Williams
Robert C. Winters
Larry D. Zimpleman

10/23/2009:  The ABCD indicated a decision made by Acting Chair Carol Sears and Vice Chair Julia Philips to continue with the inquiry into whether or not Schobel did defame Sarah Sanford and, if so, whether he failed to act honestly, possibly in material violation of Precept 1 of the Code of Professional Conduct.

The ABCD asked Schobel to officially reply to the complaint. 

4/8/2010: Schobel responded to the ABCD with respect to the Hartman, Boynton, & Crowder complaints.  There was some delay in providing this response due to procedural matters related to the ABCD process.

5/6/2010:  After reviewing the Schobel response, Carol Sears indicated that the "preliminary evaluation" of her and Acting Vice Chairs Paul Fleischacker and Robert Rietz was that the complaints did not indicate an apparent or probable material violation of the Code of Professional Conduct.  The ABCD, therefore, dismissed all three complaints made against Schobel.

In dismissing the three complaints Carol Sears, now Chair of the ABCD, stated that the facts and circumstances underlying the complaint did not indicate that there was an apparent or probable material violation of the Code.  That, of course, was the conclusion reached by Parks, Bluhm, and Lehmann (more likely than not with advice from Academy legal counsel) on 7/1/2009 - nearly a year prior.

I am not suggesting that the ABCD should have simply accepted this decision reached by the Academy and Academy legal counsel.  I am, however, suggesting that it was an easy conclusion to reach based on information the ABCD had in hand in July 2009.

In Conclusion
The Hartman/Boynton/Crowder complaints (as well as other actions directly related to the same issues) have resulted in considerable expense for the profession as noted in the article below. 

These three complaints alone, since they are directly related to activities of Bruce Schobel while acting in his capacity as an SoA Board member, are covered by SoA Indemnification and, therefore, Schobel's costs associated with defending himself will be paid by the SoA.  Most of these costs are covered by SoA liability insurance (but, of course, this payment will invariably affect the liability premium in future years).  What expenses the liability insurance does not cover will, most likely, come directly out of the SoA treasury.

The SoA, alone, is looking at $50,000 - $75,000 of expenses even though it was not a direct participant in these complaints.  The ABCD has also incurred some expense pushing the total cost of this adventure towards $100,000.

It seems that it would have been more prudent to have dismissed these three complaints against Schobel shortly after they were made - just as all complaints made against Hartman, et. al. were dismissed (seemingly out-of-hand) by the ABCD shortly after they were made.   

Remember, the substance of the three complaints was that Schobel "defamed" Sarah Sanford.

Tom Bakos, FSA, MAAA
last edited 5/13/2010

Status of the Hartman / Anker Complaint (filed 7/20/2009) & Follow-up

See 5/13/2010 Update below

My original complaint to the ABCD disclosing what I believed to be apparent, material violations of the Code of Professional Conduct by David G. Hartman and Robert A. Anker was sent to the ABCD on July 20, 2009.   The facts from which I drew this belief were stated in a well documented 18 page disclosure letter.  I know that there are some who might think 18 pages are excessive but it was complete as required by the ABCD Rules of Procedure and, I believe, that would be helpful to an understanding of the situation by anyone who had not already pre-judged the incidents reported.  

My complaint was directed at actions initiated and carried out by Hartman and Anker beginning in May 2009 related to their effort to remove Bruce Schobel as President-Elect of the American Academy of Actuaries (AAA).  This complaint and background information has been made available on my /Academy webpage.

Complaints Made Against Schobel
Coincidentally, it should be noted that three complaints were filed about the same time with the ABCD against Bruce Schobel involving the same matter. 

  • A complaint was filed by David  G. Hartman alleging that Schobel "defamed" Sarah Sanford, former Executive Director of the Society of Actuaries (SOA).  This claim of "defamation" was the subject of a legal action filed by Sanford against the SOA and Schobel.
  • A complaint, which essentially duplicated Hartman's complaint, was filed by Edwin F. Boynton.
  • A third complaint against Schobel, duplicating the above was also filed by Norman Crowder III.

All of these complaints allege, relying on the Award of Arbitration (dated 12/3/2008) produced as part of the Sanford v. SOA & Schobel that Schobel "defamed" Sanford and, therefore, violated Precept 1 of the Code.

ABCD Response to My Original Complaint
In my complaint I disclosed apparent and well documented violations of the Code based on its reasonable application to work done within the profession as a volunteer. 

On 10/23/2009 I received a letter from Carol Sears, then Acting Chairman of the ABCD, indicating that the ABCD had dismissed my complaint giving as their decision that the complaint "did not describe credible apparent or probable material violations of the Code." 
This letter was one page (a copy not included here since it was marked Confidential - as were all communications I received from the ABCD) and did not in its two very short paragraphs provide any reason or justification for arriving at their conclusion stated above.  Apparently, the ABCD gave no weight to the detailed documentation provided.  I, therefore, addressed an 11/4/2009 letter to Carol Sears asking for reasons for the dismissal (see Documents Available). 

ABCD Ignores My Request For Guidance on Blackmail
Also on 10/23/2009 the ABCD responded to me indicating that, since my 7/20/2009 Request for Guidance relative to what I thought might be an act of blackmail (see Documents Available) was not a formal complaint and, since, apparently, the ABCD did not consider blackmail a violation of the Code, the ABCD decided to take no action - not even action to provide me with the guidance which was requested!

In the ABCD response Tom Griffin did provide (of his own accord and not part of the official ABCD response) a short tutorial on blackmail containing a number of dictionary definitions of blackmail and extortion which he attempted to distinguish from the actions of Hartman.

The arguments Griffin made were unconvincing and as a result I converted my request for Guidance into a formal complaint and filed it on 11/4/2009 (see Documents Available).  In this complaint I addressed my understanding of what constituted blackmail primarily to make clear why I believed Hartman's actions fit that definition and why I followed my Precept 13 duty to report Hartman's actions as an apparent, material violation of the Code.

ABCD's Acknowledgement Letters
I received an acknowledgement from the ABCD of my 11/4/2009 letter disclosing apparent blackmail by Hartman.  Included with this 11/24/2009 letter from the ABCD was a copy of the ABCD Rules of Procedure (which I was already very familiar with) and, I assume, a caution to me regarding the fact that the ABCD likes to keep its inquiries confidential.

This prompted me to address two 12/9/2009 letters to Tom Griffin, staff attorney for the ABCD.  In one I pointed out my concerns with respect to the relevance of the ABCD as a disciplinary body.  In the other I specifically addressed issues the ABCD ought to address with respect to high profile inquiries involving senior members of the profession and the desirability for confidentiality.

Disposition of Complaints Made Against Schobel
While all of the above was going on with respect to complaints I had made against Hartman/Anker, the ABCD was also considering the complaints made by Hartman, Boynton, and Crowder against Schobel (for "defamation" remember).     

At the same time the ABCD had concluded that my complaints "did not describe credible apparent or probable material violations of the Code" the very same people concluded that the Hartman, Boynton, and Crowder complaints had merit.   It is my understanding that the ABCD has decided to move forward with these complaints.

Why? One Might Ask
It is my understanding that the Hartman, Boynton, and Crowder complaints allege that Schobel "defamed" Sarah Sanford and, therefore, violated Precept 1. 

A reasonable ABCD Chairperson, it seems to me, would have considered the following in deciding whether or not what was described in those complaints as "defamation" described "credible apparent or probable material violations of the Code":

  1. In the Sanford litigation both the SOA and Schobel denied that "defamation" had occurred and the AAA General Counsel (Mary Downs, also General Counsel to the ABCD) clearly indicated that the Award of Arbitration could not be relied on to make that determination.
  2. In fact, the SOA defended itself and Schobel against those allegations in a court of law - unsuccessfully, as it turned out, but, nevertheless, the defense was made. 
  3. Even if the ABCD comes to a decision that defamation did occur (essentially by retrying the Sanford litigation), the ABCD only functions to recommend discipline.  It would seem irrational for the SOA (or a disciplinary body of the SOA) to accept, in light of its defense against "defamation" in the Sanford litigation, a recommendation from the ABCD that "defamation" had occurred.
  4. It would, clearly, be difficult for the AAA, another membership body to which Schobel belongs, to consider any ABCD recommendation for discipline against Schobel because of the obvious conflict that exists (i.e. the AAA was in litigation with Schobel which resulted in their $600,000 settlement).    

Cost Implications
This is the really interesting part.

The AAA has already lost $600,000 to Schobel as a result of a settlement in litigation with Schobel.

The acts in violation of the Code that have been alleged against Schobel occurred while Schobel served in his official capacity as a member of the SOA Board.  Therefore, Schobel's legal expenses in fighting these accusations have been and are covered by the SOA Bylaws Indemnification Article.  The SOA has insurance which covers a substantial part of these costs.  The insurance premium for this coverage is paid for by the SOA.

In addition, because of obvious conflicts the AAA/ABCD General Counsel now has in this matter, the AAA/ABCD has retained (probably very expensive) outside legal counsel to deal with Schobel and his SOA paid legal counsel in his defense against the Hartman, Boynton, and Crowder accusations.

So, in summary, this is the situation:

  • The SOA (with offset from its insurance coverage) is paying for Schobel's defense against these ABCD complaints. 
  • The AAA is paying for outside legal services expenses incurred by the ABCD in connection with its inquiry into these complaints.

Bottom line - All of the legal costs incurred in connection with the ABCD's continued inquiry into the Hartman, Boynton, Crowder complaints is borne by SOA and AAA member dues!  Those of us who belong to both the SOA and the AAA are paying for both sides.
What word do you think best describes this situation?  I'm thinking stupid !

Aren't we actuaries supposed to be enterprise risk managers?  Do we really want this on our resume!  If this continues it could drive the actuarial profession in the U.S. into financial ruin.

Constructive Solution
I suggest the following:

  • The AAA Board should recognize that the AAA has clear and obvious conflicts in any matter involving Schobel. 
  • The AAA Board should recognize that it could not, without the risk of incurring significant additional legal expense (that would be borne by the AAA membership) ever contemplate any disciplinary action against Schobel (particularly for the charges alleged).
  • Therefore, the AAA Board should indicate to the ABCD that it should end its proceeding against Schobel (which it could enforce by cutting off funds) since the AAA would not be inclined to accept any recommendation for discipline.
  • The SOA Board should also recognize that given the circumstance (i.e. it has already denied in court that any defamation occurred) it would be irrational for it or any disciplinary body it might empanel to accept an ABCD recommendation for discipline involving defamation in the Sanford litigation.
  • The SOA Board should also recognize that if it did contemplate accepting such an ABCD recommendation for discipline, it could probably only do so by incurring significant legal expense for which no insurance coverage would likely be provided.

Full Disclosure
There are also another couple of ABCD complaints kicking around somewhat relative to this issue.  One filed by me against an actuary, AE, and one filed by AE against Bruce Schobel.  I'm not naming this actuary because this case has not been as public as the Hartman, Anker, Boynton, Crowder affair. 

My complaint against AE was also summarily dismissed by the ABCD.  AE's complaint against Schobel is still pending.  I, perhaps, might get into this in more detail later, since it also is a good example of the growing irrelevance of the ABCD in matters addressing actuarial behavior in professional volunteer roles.  

Tom Bakos, FSA, MAAA
last edited 1/9/2010

UPDATE 5/13/2010

In my 12/30/2009 letter to the ABCD (new posting above) I renewed my inquiry asking the ABCD to provide some insight into their reasoning for concluding that neither Hartman nor Anker violated the Code when making threats against Bruce Schobel. 

On January 15, 2010 I received a "final" reply from Carol Sears indicating that the ABCD considered providing a "reason" for dismissal to be the same as providing an "opinion" - neither of which they would do. 

Of course, I only repeated my inquiry because the ABCD decision on my complaints (that they did not describe credible apparent or probable material violations of the Code) was so hard to believe.

I note that the ABCD did not, apparently, consider my filing of complaints or repreated inquiries regarding my complaints against Hartman/Anker to be pushing the Code boundaries or to be too aggressive an interpretation of Precept 13.  My actions seemed only to annoy the ABCD - that is, they never criticized me for making a frivolous complaint.

The ABCD also brushed off my inquiries (see 12/31/09 letter posted above)  regarding the inconsistency of their decision relative to the ABCD's continued interest in pursuing Hartman/Boynton/Crowder complaints against Bruce Schobel and their summary dismissal of my complaints.

As you can see by the article above ( Status of Complaints Filed Against Bruce Schobel ) , the ABCD eventually (on May 6, 2010) dismissed the complaints made by Hartman, Boynton, and Crowder against Schobel. 

 Tom Bakos, FSA, MAAA
last edited: 5/13/2010