Description of Documents Available

[posted 10/8/2009 - updated 10/9/2009]

Open Letter dated 10/8/09 to the Academy Board.  This open letter (which was also emailed to each Academy Board member) addresses questions relevant to the election that will occur at the Academy's Annual meeting in Boston on October 26, 2009. 

The Academy seems to be allowing very little time for the elction process - further trivializing member participation in these elections. 

In addition, it should be noted that there are 4 Regular Director positions with terms expiring in 2009 (Bell, Emma, Herget, and Steiner) but only three candidates are being presented in the Nominating Committee slate to be presented to members on 10/26/09.  See the Open letter for more detail on this.

Also, a PROXY form is available for download.  This will allow MAAAs who are not able to be present for the voting on 10/26/09 to designate someone as their proxy to exercise their vote.  Three people have so far indicated a willingness to be proxies: Tom Bakos, Mary Pat Campbell, and Carol Mahler.

NOTE: The PROXY Form Instructions have been updated to provide more options for returning it. 

Mary Pat Campbell intends to make and Carol Mahler intends to second the nomination of Tom Bakos to fill the fourth expiring Regular Board term - the Academy Nominating Committee has only presented a slate of three candidates so none of them will be displaced by this nomination.  You may exercise your Proxy so that either Mary Pat, Carol or Tom can vote for Tom Bakos after he is nominated from the floor.    

[posted 10/2/2009]

Summary of the Settlement - Insights.  Also posted for those who did not get it from the Academy website is the Settlement Agreement posted there. 

The Settlement Agreement was, intentionally, not confidential.  Its publication, perhaps, serves as the first step towards repairing any reputational damage caused by the litigation.

In large measure (I believe) this matter got out of control because the Academy Board has been non-responsive and unaccountable to the members.  A way to address this issue is to change the governance structure of the Academy so that all Officers and Directors of the Academy are elected directly by the members in competitive elections.

Very shortly Academy members will be given an opportunity to participate in a member initiated Academy Bylaw amendment designed to provide for direct elections.   

[posted 9/23/2009]
Pledging Allegiance.  For those of you without the time to delve into all of the documents regarding this Academy issue I have produced a Summary.  It outlines this drama chronologically from its beginning in about May 2009 through to the present (9/23/09) - which will be past shortly. 

The Exhibits posting provide support for the summary - most, but not all of the Exhibit material, has already been posted.  One should be able to read and understand the summary without reference to the exhibits but reading them, if you haven't already done so may provide a richer experience.  

Recognize that I may be considered a biased reporter by some - who isn't.  But, I have attempted to provide factual material (e.g. the Exhibits) so that readers may readily identify and ignore any opinions of mine which the reader thinks wrongly arrived at.  I encourage you all to think and not just pledge allegiance to one side or the other - that, as I think this drama clearly shows, can very often lead to trouble.

Please do not take any of this as a condemnation of the American Academy of Actuaries.  It is its leaders only I find fault with.  As noted in the Summary, we are about 16,000 strong and nearly every one of us, I believe, would have exhibited greater common sense than our current leaders have so far done.  Even if you believe that Bruce Schobel should no longer be the Academy President, surely you must agree there was a much better way to attempt to accomplish that goal.


[posted 9/20/2009]

Academy 8/5/09 Board Vote Detail.  This document provides detail about how Academy board members voted at the 8/5/2009 Board meeting.  It is based on the best information available to me and I believe it to be accurate.  I will gladly make any changes or corrections that are pointed out.

[posted 9/15/2009]

Eleven (11) new documents are posted.  The first 9 (listed to the left) relate  to the hearing begun on Wednsday, 9/9/09, and continued to Tuesday, 9/15/09.  The other 2 are older documents which may provide additional background.

The first two documents listed are the transcripts from the 9/9/09 and 9/15/09 hearings.  The judge ruled against a Temporary Restraining Order (TRO) citing the  very substantial hurdles that must be overcome in the DC District.   

In introducing his ruling the judge said:

It's really unfortunate that what's put into motion the series of the sequence of events since July is the undisputed fact that the terms of a confidential arbitration agreement were revealed. That's really -- that's really unfortunate. It's unseemly. It's disgusting, but that's -- that's why you folks are all here, and I think that when the final chapter is written in this book, I think the world's going to know more about the American Academy of Actuaries than it ever wanted to learn and know about; nevertheless, the Court's prepared to rule.

The judge is referring to the Award of Arbitrators document (a confidential document part of the SoA litigation with its former Executive Director) which Hartman sent to 19 former Academy Presidents and each member of the Academy Board.  Since this document is part of a confidential proceeding in the SoA I will not publish it.  Hartman is not a member of the SoA Board and apparently received this document from someone who did not honor that confidentiality.  Although this document is supposedly a "public document", no one appears to have found it publicly.

The next 4 documents are briefs requested by the judge following the 9/9/09 hearing and provide arguments the judge requested with respect to the narrow focus of his inquiries on 9/9/09.

Bruce Schobel's Third Declaration outlines events leading up to and what happened at the 8/5/09 Academy Board meeting from his point of view.  Interestingly, the concerns Hartman derived from the Award of Arbitration were not a signifcant part of the discussion.  Instead, Cecil Bykerk (President of the SoA) made the motion to remove Schobel as President-Elect of the Academy which was seconded by Mike McLaughlin (President-Elect of the SoA). 

At the 8/5/09 meeting, Bykerk, as has been reported on the Actuarial Outpost by others, gave as a reason for removal the fact that Schobel has spoken against FEM, an education proposal being discussed within the SoA.  The SoA has as of today, by the way, made no decision on FEM except a decision to explore it further and seek feedback from SoA membership in order to help it make a decision.  Bykerk's objections, while, apparently, voiced as an accusation that Schobel had violated a "duty of loyalty" to the SoA, was, perhaps, more properly characterized as anger directed at an opponent of his point of view.  In any event, the FEM proposal was of no relevance to the Academy.

McLaughlin voiced concern about personal conflicts he has had with Schobel as arguments for Schobel's removal as President-Elect of the Academy.  These are arguments McLaughlin made within the SoA Board to no effect and has now, apparently, chosen to re-introduce into the Academy venue.  They too do not seem to rise to the level of grounds for the unprecedented removal of an Academy President-Elect. 

As the judge indicated, as this legal process moves forward we and the public which we serve will know more about the American Academy of Actuaries than we ever wanted to learn.

[posted 9/10/2009]
Annotated NY Times article dated 9/8/2009.  I can't resist having a little fun at, perhaps, the expense of the New York Times.

I have very subjectively used word count to split the reporting into catagores as follows:
 

Article Statistics (by word count)

Opinion --- Academy/Profession

        Positive -  0%

        Negative - 6%

 

Opinion --- Schobel

        Positive   -   4%

        Negative  - 14%

 

        Fiction  -  27%

 

        News  -     49%



[posted 9/7/2009]
Hartman's 8/3/2009 e-mail/letter to the Academy Board.  Although David G. Hartman has no standing with the Academy Board (other than as President over 20 years ago) he pressed his case with the Academy Board by sending them an e-mail in which he, apparently, urges the Academy Board to apply the "New York Times" test.  In particular, he says:

That test is that you should only do things if you would be comfortable having your actions reported on the front page of the New York Times (professionalism 101).

Mr. Hartman would have the Academy Board act on the perceptions that some might draw from an Award of Arbitrators report members of the SoA Board (including me) have had for 9 months.  In this regard, he states:

I ask that you also remember that reputation is about perception, not proof.

Although I am trying to be an unbiased reporter of facts I cringe when I read Hartman say:

The Academy exists to serve the public with integrity.

This 8/3/2009 email comes after Hartman had a chance to read and consider the John Parks' 7/1/2009 letter (see below) which expressed strong support and concern that proceeding down the path laid out by Hartman will only serve to damage the integrity and the reputation of the profession, the Academy, and Bruce.  What must Hartman have been thinking?

Hartman also failed to consider that the SoA Board, on which I sit, has been exposed to the Award of Arbtrators document for 9 months and to the content Hartman considers so damning to perception for over two years.   During this period all 28 of us perceived absolutely no cause for any kind of alarm in any of these items.  I, therefore, posit that with respect to this issue at least the SoA Board acted with much greater competence and wisdom than the Academy Board has.


[posted 9/7/2009]
Schobel's Reply Brief.  This is Bruce Schobel's reply to the Academy's Memo in Opposition to the complaint.  This, the Complaint (posted 9/2/09), and the Academy's Memo in Opposition (posted 9/2/09) are what the judge read prior to the 9/3/09 Hearing - see transcript of this hearing below.


[posted 9/7/2009]
Transcript of the hearing held on 9/3/2009 in the U.S. District Court DC.  This is an 88 page transcript at which both sides were asked questions by the judge.  The critical argument is whether or not a Temporary Restraining Order (TRO) should be issued to require the Academy to not interfere with Schobel's ongoing duties as President-Elect while this matter is being decided.

The judge indicates, without making such a ruling (a matter to be determined by the jury if the case goes to trial) that this is a "classic case for damages" and is making inquiry to determine why that wouldn't be sufficient remedy.

The judge continued the hearing until Wednesday, 9/9/09, at which time he, after considering the matter further, he indicated he would rule on the TRO.

[posted 9/5/2009]
My Request to ABCD for Guidance on Academy Board apparent Code Violations.  On 9/5/2009 I sent this request to Curtis Huntington, Chair of the ABCD for guidance on apparent Academy Board Code violations.  Essentially, it appears that the Academy Board has regularly ignored its Bylaws and applicable Illinois law.  Detailed examples are given in the posted document.

[posted 9/5/2009]
My ABCD Complaint filed July 20, 2009 against David G. Hartman, Robert A. Anker, et. al. for an apparent material violation of the Code of Professional Conduct.

Ordinarily I would not have made my disclosure public.  However, disclosures made by others regarding partial contents of the arbitration award document (which was part of an internal SoA litigation) make it necessary to address those elements which have become public in order for Academy members to have a fair understanding of the underlying facts with respect to the pending Academy litigation.

The Arbitration Award has in it other information related to the internal SoA litigation which, though technically public, is not generally available.  Because it does relate, principally, to an internal SoA litigation matter which I as an SoA Board member have agreed to keep confidential and which, in the best interests of the SoA, ought to be kept confidential, I will not publish it. 

The events in the Academy leading to the currently pending litigation were initiated by an e-mail sent by Robert A. Anker to Academy Board members on 7/9/2009.  This was signed by 19 former Presidents of the Academy.  Notably, it was not signed by John Parks (current President), Steve Lehman, nor Bill Bluhm - immediate past presidents of the Academy.  The text of this e-mail is cited beginning on page 11 of my ABCD Complaint. 

This Anker e-mail is what has been called the Hartman letter.  It is called theHartman letter because evidence suggests that it was originally drafted by David G. Hartman.  See the posted document ABCD Guidance Sought.  This is my request to the ABCD for guidance regarding Hartman's 6/25/2009 email to Bruce Schobel in which he, apparently, threatens to disclose certain contents of the Arbitration Award (contained in the Hartman letter ) related to Schobel if Schobel does not agree to resign.  As noted in my ABCD request for guidance, this seems to meet a classic definition of blackmail.

Schobel did not resign, hence Hartman through Anker sent the e-mail to the Academy Board plus a copy of the Award of Arbitration.  It is not clear why Hartman did not send the email himself.  Although, it should be noted that Hartman is a New Jersey resident and Anker is not.  Some of the disclosures made in the email sent ultimately by Anker violated New Jersey law.

This Hartman letter resulted in John Parks 7/1/2009 letter to the Academy Board (signed also by Bill Bluhm and Steve Lehmann) defending Schobel from what they believed to be unfair and untrue accusations.  It is reasonable to assume that Mary Downs, Academy General Counsel at the time, helped in crafting Parks' response.  I point out, in particular the following pragraph:

Rather than the conclusions some have drawn from the Arbitration Award, we draw our conclusions both from what we know the Award is not, and from what we know Bruce to be. There are many others, beyond just the three of us, who believe that in the circumstances that led to the arbitration, Bruce acted courageously, against entrenched interests, to lead the SOA during this past period of turmoil.  Many see him as a protector of whistleblowers who restored the SOA to a position of integrity and strength in its internal leadership.  Bruce, in our experience, is a passionate, strong, and outspoken questioner of the status quo and is unafraid where his intellectual curiosity will take him or others.

I have previously quoted the opening and closing paragraphs.

The Parks' letter also clearly acknowledges the Academy position that the actions Hartman, Anker, et. al were involved in "will only serve to damage the integrity and reputation of the profession, the Academy, and Bruce without any reasonable or fair basis for action by the Academy."

It should also be pointed out that, obviously, since the SoA Board has read the Award of Arbitration that these identical issues, raised as accusations against Schobel by Hartman, Anker, et. al., were known to all 28 members of the SoA Board months before 8/5/09.  The SoA Board never considered these issues discussed in the Award of Arbitration relative to Schobel and raised as accusations by Hartman, Anker, et. al. to be indicative of anything.

Considering the letter sent by Hartman, Anker, and other past Academy presidents as an actuarial communication or report, I believed it to be evidence of a material violation of the Code of Professional Conduct.  Therefore, as required by Precept 13 of the Code, I disclosed these apparent violations to the ABCD.  I believe that it also, as noted in my ABCD request for guidance exposes one of the senders to civil or criminal litigation.

Despite this appeal to reason on the part of John Parks, the Academy Board met on 8/5/2009 and is now asserting in Federal Court that its vote to remove Schobel was valid and that Schobel is no longer President-Elect of the Academy.  It is this vote abd subsequent damage to Schobels professional reputation caused by it and fall out from it that is the subject of the currently pending litigation .

A hearing on the case occurred on Thursday, 9/3/2009 in the U.S. District Court DC.  At this public hearing the judge, who had obviously had a good understanding of the arguments made in the filings, heard arguments from both sides.  I am in the process of getting a transcript of this hearing and intend to post it to this website when I receive it.  A report of the hearing indicates that the judge found the case interesting in that it was not just about money.  He indicated that if it were just about money it would be easy to decide.  As is fairly common in cases such as this, the judge urged the sides to settle and agreed to provide a federal magistrate to aid in this mediation process which is now ongoing.  The judge, it is reported, strongly signaled that the Academy had better be prepared, however, with a number containing a lot of zeros.  The judge also seemed incredulous at the Academy counsel argument that adequate notice of the 8/5/09 meeting had been given.  You will be able to draw your own conclusions when the transcript is posted.

NOTE: A complainant is requested but not obligated to keep disclosures made to the ABCD confidential.  The ABCD is obligated to keep its proceedings confidential.     

[posted 9/2/2009]
The Illinois General Not For Profit Corporation Act of 1986 (Act) - The American Academy of Actuaries was organized as an Illinois Not For Profit corporation.  Therefore, this law applies to them.

In reading it, please be aware that the law is broad and covers many different types of Not For Profits.  For example residential homeowners associations are one type.  The Academy falls into the category of organizations that has members who elect board members.  Also, the Academy does not have officers who are not also board members.  It is important when reading any provision or paragraph of the law to understand its context and to which type of organization among the broad types covered by the law to which it applies.


[posted 9/2/2009]
The Complaint filed by Plaintiff Bruce Schobel against the Academy of Actuaries. 
 

[posted 9/2/2009]
Academy's Memo in Opposition.  The response filed by Defendant  the American Academy of Actuaries in the form of a Memo and Exhibits, consisting of the Declaration of Mary Downs.


[posted 9/2/2009] 
My letter dated 9/2/2009 to Andrea Sweeny, Secretery/Treasurer of the AAA.  In this letter I ask for copies of the motion language of any motions voted on at either the May 21, 2009 or the August 5, 2009 Academy Board meetings. 

At the May 21, 2009 meeting the Academy Board, apparently, voted to split the Secretary/Treasurer position into two positions, Secretary and Treasurer per the Summary of Actions Taken posted on the Academy website.  In order to accomplish this, however, the Academy Bylaws would need to be amended.  There is no indication in any announcement made by the academy (that I have found) that the Bylaws have been amended.  My understanding is that the nature of the amendment considered at the May 21 Academy Board meeting was such that a member vote would be required.
 
The August 5th meeting is, of course, the meeting at which the Academy Board claims to have voted to remove Bruce Schobel as President-Elect/Director of the Academy.  However, even though this vote is claimed to have occurred in an open meeting of the Board, no announcement of this vote or the motion language has ever been provided to the members.

I will keep this Document source updated with respect to any response I get from Andrea Sweeny or the Academy.

UPDATE [posted 9/11/09]:  On Wednesday, 9/9/09, I called Andrea Sweeny to inquire as to the status of my information request.  I did not expect that the Academy Secretary/Treasurer would respond relative to the 8/5/09 Board meeting and she didn't - reciting canned language that the request had been forwarded to the Academy's attorney because of pending litigation.

I indicated that surely this litigation did not encompass the information I requested relative to the 5/21/09 Board meeting at which, apparently, a split of the Secretary/Treasurer position was voted on.  However, Ms. Sweeney recited the same canned language.

I am guessing that the members will learn about what the Academy Board actually did re: the Secretary/Treasurer split at the Annual meeting in Boston on October 26 when they announce (we can hope) the results of their officer-director elections from the Academy Board meeting to occur on October 20, 2009.
 
[posted 9/1/2009]
AAA Board Composition Documentation - The Academy board consists of different types of directors differentiated by:
  • terms of office;
  • how they are elected;
  • their duties and responsibilities;
  • a constituency.
This paper provides an overview of the Academy board composition and describes the basis for the board structure in the Academy Bylaws and the Illinois General Not For profit Corpoaration Act of 1986 which is law applicable to the Academy since it is organized as an Illinios Not For Profit Corporation.

The references to Ilinois law are my reasonable interpretations and are not intended as legal advice.