Business

/

ArcaMax

Aon fined $1.5 million over misleading PA pension fund

Joseph N. DiStefano, The Philadelphia Inquirer on

Published in Business News

The Securities and Exchange Commission has slapped $1.5 million in penalties, refunds, and interest on consultant Aon Investments USA Inc. to settle charges the Chicago firm misled the Pennsylvania Public School Employees’ Retirement System (PSERS) about errors that caused an exaggerated profit report for 2011-2020.

The miscalculation was a subject of two federal investigations. It also figured in a boardroom fight over the agency’s investments that led to the 2021 retirement or resignation of top PSERS executives and a multibillion-dollar reallocation away from private investments by its governing board.

After correcting the error, PSERS had to boost payroll deductions from 100,000 of the public school employees who contributed to the retirement plan to help cover its poor results. PSERS manages investments worth around $70 billion to help pay pensions to half a million current and retired public school staff.

“Investment advisers must be scrupulously honest with their clients,” LeeAnn G. Gaunt, chief of the SEC’s Public Finance Abuse Unit, said in a statement. “Pension funds and other municipal entities should be able to trust that their investment advisers are telling them the truth.”

Aon spokesman Robert Elfinger said, “We are pleased to have resolved this matter,” which didn’t affect PSERS’ actual assets.

In 2020, when data that Aon provided PSERS for the 2011-2020 calculation didn’t match PSERS’ published quarterly returns for some periods, state Treasurer Joe Torsella, who served on the board, asked PSERS executives to explain. Reassured by Aon, the PSERS leaders convinced its board to approve the report in December anyway.

 

According to the SEC, when PSERS “repeatedly questioned” the discrepancy, Aon partner Claire P. Shaughnessy, who oversaw Aon’s work calculating PSERS returns, “failed to adequately investigate that discrepancy” and instead gave reasons that Aon already knew weren’t accurate. She denied Aon had erred, “when, in fact, she did not know the reason for the discrepancy,” the SEC said.

Shaughnessy was “at least negligent” and “willfully violated” securities law, the SEC concluded. She failed to check data when PSERS asked for explanations and instead made false claims — alternately citing public and private investment valuation errors for the discrepancy.

Aon “willfully” violated securities law by giving PSERS inaccurate information and then “made material misstatements” and “omitted facts” even after PSERS realized that the numbers were wrong and that it had to restate its results, the SEC said.

Under terms of the settlement, neither Shaughnessy nor Aon admitted wrongdoing.

...continued

swipe to next page

©2024 The Philadelphia Inquirer, LLC. Visit at inquirer.com. Distributed by Tribune Content Agency, LLC.

Comments

blog comments powered by Disqus