Notice of Disciplinary Determination

February 2012

On December 13, 2011, the Society of Actuaries convened a Discipline Committee to review a matter referred by the Actuarial Board for Counseling and Discipline ("ABCD"). The Discipline Committee determined that Robert D.J. Scheiring, FSA, should be expelled from the Society of Actuaries for a material violation of Precept 1 of the Code of Professional Conduct.

The disciplinary matter related to conduct by Mr. Scheiring that reflected adversely on the actuarial profession. Mr. Scheiring was arrested in 2009 on charges involving the possession and distribution of certain materials in violation of federal law. In June 2010, Mr. Scheiring pled guilty to two counts of an indictment, and he is now serving a sentence for those crimes.

Precept 1 states, "An Actuary shall act honestly, with integrity and competence, and in a manner to fulfill the profession's responsibility to the public and to uphold the reputation of the actuarial profession." This Precept is further elaborated in Annotation 1-4, which states:

• An Actuary shall not engage in any professional conduct involving dishonesty, fraud, deceit, or misrepresentation or commit any act that reflects adversely on the actuarial profession. (Emphasis added.)

Mr. Scheiring violated Precept 1 by engaging in conduct that violated the law, and the nature of which conduct reflects adversely on and damages the reputation of the actuarial profession.

All members of the SOA are reminded of their responsibility to follow the Code of Professional Conduct. Members are encouraged to maintain familiarity with the Code and its precepts by regular review and/or participation in webcasts or professionalism sessions offered at various SOA and other actuarial conferences.

June 2011

On February 16, 2011, the Society of Actuaries convened a Discipline Committee to review a matter referred by the Actuarial Board for Counseling and Discipline ("ABCD"). The matter related to the conduct of Robert S. Wagstaff, FSA, as an illustration actuary for a life insurance company during the period 1999 to 2008. The Discipline Committee determined that Mr. Wagstaff should be suspended from the Society of Actuaries for a period of five years due to material violations of certain Precepts¹ under the Code of Professional Conduct.

As an illustration actuary for his employer, Mr. Wagstaff prepared, signed and issued annual certifications that his company's life illustrations were prepared in accordance with state regulations and in conformity with ASOP 24. During the years at issue, however, he had not performed the underlying tests required to make such certifications, or maintained the documentation to support the certifications as required by ASOP 24. The Discipline Committee determined that this conduct violated Precepts 1 and 3, which state:

• Precept 1: An Actuary shall act honestly, with integrity and competence, and in a manner to fulfill the profession's responsibility to the public and to uphold the reputation of the actuarial profession.
• Precept 3: An Actuary shall ensure that Actuarial Services performed by or under the direction of the Actuary satisfy applicable standards of practice.

Because Mr. Wagstaff had not performed the underlying tests required to make the certifications he issued during these years, he misled the state regulators where the certifications were filed, as well as the management, agents and policyholders of his employer. Mr. Wagstaff thereby violated Precept 8, which states:

• Precept 8: An Actuary who performs Actuarial Services shall take reasonable steps to ensure that such services are not used to mislead other parties.

All members of the SOA are reminded of their responsibility to follow the Code of Professional Conduct. Members are encouraged to maintain familiarity with the Code and its precepts by regular review and/or participation in webcasts or professionalism sessions offered at various SOA and other actuarial conferences. In addition, in the US, the ABCD is available for counseling on matters related to professional conduct and actuarial practice.

¹ The violations of Precepts 1, 3 and 8 relate to conduct during the period 2001 to 2008. For 1999–2000, the violations relate to the predecessors of these precepts under the Code of Professional Conduct in effect prior to 2001.

June 2011

On February 23, 2011, the Society of Actuaries convened a Discipline Committee to review a matter referred by the Actuarial Board for Counseling and Discipline ("ABCD"). The matter related to the conduct of Thomas M. Tolliver, ASA, and his qualifications for handling matters related to various US qualified pension plans during the period 1999 to 2008.

The Discipline Committee determined that Mr. Tolliver should be expelled from the Society of Actuaries for material violations of certain Precepts under the Code of Professional Conduct.

Precept 1 states, "An Actuary shall act honestly, with integrity and competence, and in a manner to fulfill the profession's responsibility to the public and to uphold the reputation of the actuarial profession." Mr. Tolliver violated Precept 1 when he failed to renew his Enrolled Actuary status and then repeatedly misrepresented himself as an Enrolled Actuary in good standing to his employer, his clients, and the Internal Revenue Service.

Precept 2 states, "An Actuary shall perform Actuarial Services only when the Actuary is qualified to do so on the basis of basic and continuing education and experience, and only when the Actuary satisfies applicable qualification standards." Mr. Tolliver violated Precept 2 by signing Schedules B to IRS Form 5500 for several years during which he was not qualified to do so.

Precept 8 states, "An Actuary who performs Actuarial Services shall take reasonable steps to ensure that such services are not used to mislead other parties." Mr. Tolliver violated Precept 8 by misleading various parties as he signed statements as an Enrolled Actuary while he was not qualified to do so.

Precept 14 states, "An Actuary shall respond promptly, truthfully, and fully to any request for information by, and cooperate fully with, an appropriate counseling and disciplinary body of the profession in connection with any disciplinary, counseling, or other proceeding of such body relating to the Code. The Actuary's responsibility to respond shall be subject to applicable restrictions on Confidential Information and those imposed by Law." Mr. Tolliver violated Precept 14 by failing to respond promptly to the ABCD during its investigation.

The violations of Precepts 1, 2 and 8 relate to conduct during the period 2001 to 2008. For the period 1999 to 2000, the violations relate to Precepts 1, 3 and 9 of the Code of Professional Conduct in effect prior to 2001.

All members of the SOA are reminded of their responsibility to follow the Code of Professional Conduct. Members are encouraged to maintain familiarity with the Code and its precepts by regular review and/or participation in webcasts or professionalism sessions offered at various SOA and other actuarial conferences. In addition, in the US, the ABCD is available for counseling on matters related to professional conduct and actuarial practice.

May 2011

On May 27, 2010, the Society of Actuaries convened a Discipline Committee to review a matter referred by the Actuarial Board for Counseling and Discipline ("ABCD"). The matter related to work performed by Jonathan Schwartz, ASA, as a consulting actuary on behalf of certain clients; namely, in preparing certain actuarial communications for his clients which provided estimates of the future cost of proposed legislation affecting public pension obligations.

The Discipline Committee determined to publicly reprimand Mr. Schwartz for material violations of Precepts 1, 3 and 4 of the Code of Professional Conduct. The Committee determined (as did the ABCD) that Mr. Schwartz's communications with his clients did not satisfy applicable Actuarial Standards of Practice (ASOPs) in that:

• In certain actuarial communications, he failed to describe any assumptions or other valuation elements on which his findings were based, and did not refer to any other document or source where those assumptions or valuation elements could be found. In this respect, he failed to comply with ASOPs 4 and 41, in violation of Precepts 3ⁱ and 4ⁱⁱ .
• In developing one cost estimate, he used assumptions and methods that were unreasonable, leading him to derive results that should have prompted additional scrutiny. In this respect, he failed to perform actuarial services with the skill and care required under Precept 1ⁱⁱⁱ.

All members of the SOA are reminded that when they are faced with potential issues regarding professional conduct, the ABCD is available for counseling.

ⁱ Precept 3 states, "An Actuary shall ensure that Actuarial Services performed by or under the direction of the Actuary satisfy applicable standards of practice."

ⁱⁱ Precept 4 states, "An Actuary who issues an Actuarial Communication shall take appropriate steps to ensure that the Actuarial Communication is clear and appropriate to the circumstances and its intended audience and satisfies applicable standards of practice."

ⁱⁱⁱ Annotation 1-1 of Precept 1 states, "An Actuary shall perform Actuarial Services with skill and care."

May 2010

On March 25, 2010, the Society of Actuaries convened a Discipline Committee to review a matter referred by the Actuarial Board for Counseling and Discipline ("ABCD"). The matter related to work performed by William Lynn Townsend, FSA, in his role as the appointed actuary for a life insurance company for year ends 2004, 2005, and 2006.

The Discipline Committee determined to publicly reprimand Mr. Townsend for material violations of certain Precepts under the Code of Professional Conduct.

• Precept 1 states, "An Actuary shall act honestly, with integrity and competence, and in a manner to fulfill the profession's responsibility to the public and to uphold the reputation of the actuarial profession."
• Precept 3 states, "An Actuary shall ensure that Actuarial Services performed by or under the direction of the Actuary satisfy applicable standards of practice."
• Precept 4 states, "An Actuary who issues an Actuarial Communication shall take appropriate steps to ensure that the Actuarial Communication is clear and appropriate to the circumstances and its intended audience and satisfies applicable standards of practice."

A violation of Precept 1 related to Mr. Townsend's failure to stay current with the relevant requirements of the insurance department of the state in which the company was domiciled with respect to statements of actuarial opinion for the subject year ends. The violation of Precept 3 related to his failure to comply with the requirements of the U.S. Actuarial Standards of Practice Nos. 22 and 41. Violations of Precepts 1 and 4 related to his issuance of statements of actuarial opinion indicating compliance with the insurance department's asset adequacy analysis requirements, and his failure to incorporate the appropriate analyses in providing those statements of actuarial opinion.

All members of the SOA are reminded that when they are faced with potential issues regarding professional conduct, the ABCD is available for counseling.

February 2009

The SOA's Committee on Discipline (COD) reviewed a referral from the Actuarial Board for Counseling and Discipline (ABCD) and determined to impose discipline on Gerald J. Rankin, FSA. Mr. Rankin appealed that determination and on Aug. 21, 2008, the SOA's Appellate Tribunal unanimously voted to uphold the COD's determination and to publicly reprimand Gerald J. Rankin for material violations of:

• Precept 1 of the 2001 SOA Code of Professional Conduct (2001 Code);
• Precept 13 of the 2001 Code and Precept 14 of the 1993 SOA Code of Professional Conduct (1993 Code);
• Precept 14 of the 2001 Code.

Violations of Precept 1 related to inaccurate statements made in some letters to insurance departments. Violations of Precept 13 related to Mr. Rankin's failure to make the ABCD aware of work performed by another actuary that Mr. Rankin believed was not performed in accordance with the 1993 Code and/or the 2001 Code. Violations of Precept 14 related to Mr. Rankin's failure to cooperate fully with the ABCD investigator.

All members of the SOA are reminded that when they are faced with potential issues regarding professional conduct, the ABCD is available for counseling.