Actuarial Outpost
 
Go Back   Actuarial Outpost > Actuarial Discussion Forum > General Actuarial
FlashChat Actuarial Discussion Preliminary Exams CAS/SOA Exams Cyberchat Around the World Suggestions

Salary Surveys
Property & Casualty, Life, Health & Pension

Health Actuary Jobs
Insurance & Consulting jobs for Students, Associates & Fellows

Actuarial Recruitment
Visit DW Simpson's website for more info.
www.dwsimpson.com/about

Casualty Jobs
Property & Casualty jobs for Students, Associates & Fellows


General Actuarial Non-Specific Actuarial Topics - Before posting a thread, please browse over our other sections to see if there is a better fit, such as Careers - Employment, Actuarial Science Universities Forum or any of our other 100+ forums.

Reply
 
Thread Tools Display Modes
  #1  
Old 02-22-2017, 12:57 PM
Tim Sharpe Tim Sharpe is offline
AAA
 
Join Date: Feb 2017
College: Michigan
Posts: 5
Default Actuary Sues Academy for Confidentiality Breach

Earlier this month, I sued the American Academy of Actuaries. I never dreamed during my thirty-year actuarial career that I would have to do this. But, I had no choice after the Academy destroyed my practice and reputation by leaking embarrassing and misleading confidential information from an ongoing investigation by the Academy’s Actuarial Board for Counseling and Discipline (ABCD). A copy of the lawsuit, which I filed in federal court in D.C., can be found here:

https://drive.google.com/file/d/0BxE...ew?usp=sharing

What happened to me could happen to any of you unlucky enough to be on the receiving end of an ABCD complaint, regardless of its merit. Although actuaries have long expected that the Academy/ABCD would handle disciplinary proceedings fairly and with strict confidentiality—something guaranteed by Academy Bylaws and recognized by Academy leadership as essential—that expectation may be little more than a pipe dream, subject to the whims, motives, machinations, and recklessness of Academy/ABCD leaders and staff.

I had a successful practice representing municipalities in Illinois on pension matters. I have never been disciplined by the Academy or any actuarial organization. I have, however, been on the receiving end of a series of outrageous ABCD complaints by competing actuaries who I believe launched a campaign to steal my clients and destroy my practice by filing spurious charges with the ABCD.

Without going into the details, which were supposed to be confidential, none of these complaints has resulted in disciplinary action against me. No client has complained about me. No one has accused me of criminal, fraudulent, dishonest, or immoral conduct. No one claims material harm from my alleged actions.

Nevertheless, as a result of a process filled with irregularities, animosity, double-standards, and contrived allegations, the ABCD issued a confidential recommendation that I be expelled from the Academy—something the Academy has done only 11 times in its history, in cases of serious crimes or fraud.

Anyone familiar with the ABCD knows that an ABCD recommendation is not discipline; it is a recommendation to be considered by disciplinary committees of the actuarial organizations of which the subject actuary is a member—in my case the Academy. Those organizations—not the ABCD—decide what, if any, private or public discipline is appropriate.

My opportunity to present my case to the Academy Disciplinary Committee to disregard the ABCD’s outrageous recommendation was dashed when the Academy/ABCD leaked the ABCD’s confidential recommendation of expulsion. In essence, the Academy/ABCD decided to convict me before my trial even began, i.e., “guilty” until proven otherwise. An influential website published the leak and the impact has been devastating. It spread widely through the actuarial and business community in which I practice, leading clients, under substantial public pressure, to terminate my services despite their complete satisfaction with my work.

As a result, I sued the Academy, not only to hold it accountable for the substantial harm it has caused me by its disgraceful conduct, but also to warn fellow members of the actuarial community of the serious threat to their professional reputation if they become entangled in an ABCD matter, and the Academy/ABCD decides to do to them what they did to me.

Last edited by Tim Sharpe; 03-18-2017 at 12:12 PM..
Reply With Quote
  #2  
Old 02-22-2017, 02:08 PM
Enough Exams Already Enough Exams Already is offline
Member
SOA AAA
 
Join Date: Sep 2001
Posts: 3,356
Default

Disclaimer: I haven't read your filings, nor am I a pension actuary. I don't know anything about you, your case, or the politics of public pension actuarial consulting anywhere, let alone in Illinois.

But I have to ask: While I understand the desire to get the word out about your case, are you sure you want to try it here, in the court of public AO opinion?

Given that anything said here is easily discoverable by counsel, are you sure this is something you want to argue here?
__________________
"Allow me to introduce you to the American public.
You'll want to wash your hands afterward."
--Samantha

"I guess I just have a lower prior-expectation of humanity than you folks. You win for optimism, but I win for accuracy."
--Pseudolus

"I wonder if there's a lower bound on how dumb the internet can get. We gotta be getting close, right?"
--Mother of DragQueens
Reply With Quote
  #3  
Old 02-22-2017, 02:11 PM
campbell's Avatar
campbell campbell is offline
Mary Pat Campbell
SOA AAA
 
Join Date: Nov 2003
Location: NY
Studying for duolingo and coursera
Favorite beer: Murphy's Irish Stout
Posts: 79,352
Blog Entries: 6
Default

Related:

https://www.nytimes.com/2015/07/09/b...ef=topics&_r=1

Quote:
Bad Math and a Coming Public Pension Crisis
By MARY WILLIAMS WALSH
JULY 8, 2015

When Jim Palermo was serving as a trustee of the village of La Grange, Ill., he noticed something peculiar about the local police officers and firefighters. They were not going to live as long as might be expected, at least according to pension tables.

After Mr. Palermo dug into the numbers, he found that the actuary — the person who advises pension plan trustees about how much money to set aside — was using a mortality table from 1971 that showed La Grange’s roughly 100 police officers and firefighters were expected to die, on average, before reaching 75, compared with 79 under a more recent table.

The four years are significant beyond any interest in macabre statistics. When actuaries calculate the numbers for a pension plan, mortality rates are a powerful hidden factor. If an actuary predicts the workers will live to an old age, it means they will be drawing their pensions for more years. That, in turn, means the employer should set aside more money up front, to keep from running out later.

Assuming shorter life spans reduces annual contributions and frees up money for other things, like bigger current paychecks. And if the plan bases pensions on pay, as those in most American cities do, shortening the workers’ life spans on paper could lead to both fatter paychecks now and bigger pensions in the future. In La Grange’s case, those four years meant tens or hundreds of thousands of dollars to each retiree.

.....
In La Grange, Mr. Palermo, who was elected in 2007, thought the pension funds were being shortchanged. More and more police officers and firefighters were retiring, and they were not dying according to the mortality table used by the actuary. Between them, the two pension funds had less than half the money they should. If this continued, he said, the money would eventually run short, and people would get hurt.

And not just in La Grange. The actuary, Timothy W. Sharpe, had the biggest market share of police and fire pension business in Illinois.

“I think it’s a moral hazard,” Mr. Palermo said.

Mr. Palermo, who works in financial services, determined Mr. Sharpe was using a table from 1971, which tracked a group of people born from 1914 to 1918, who retired from 1964 to 1968. It is seldom used these days. A table from 2000 is considered more accurate, and in 2014 the Society of Actuaries issued an even newer one.

Mr. Palermo researched mortality rates in the American work force and found no evidence that police and firefighters die younger than other public workers. Finally, he sent a confidential complaint to the Actuarial Board for Counseling and Discipline, which deals with actuaries who stray from the profession’s standards of practice.

A few months later, his complaint was written up in a village manager’s report and distributed at a public meeting. Mr. Palermo had accused Mr. Sharpe of making statements that were “frequently erroneous and incomplete,” it said. He had accused Mr. Sharpe of misleading the village board and persuading it to incorporate the wrong mortality assumptions into the local tax levy.

The news media pounced.

The village manager’s report strongly suggested that Mr. Palermo was a troublemaker with few allies in the local government. It said he had acted on his own and that most of the village board was on Mr. Sharpe’s side.

It also said that Mr. Sharpe had refused to supply any numbers until the complaint was resolved, so the village had no numbers on which to base the coming year’s tax levy. It was about to miss a state deadline.

Mr. Sharpe sent a letter to The Doings, La Grange’s newspaper, saying that he had the unanimous support of the police and fire trustees. “I will not be intimidated,” he wrote.

In a phone interview, Mr. Sharpe said that he had been instructed to use the 1971 mortality table by the Illinois Insurance Department. Even though it was old, he said, he considered it more realistic because it projected death rates out to age 110. The table from 2000 uses a different population sample and projects death rates out to age 120.

If La Grange projected life spans the way Mr. Palermo wanted, he added, it would “be collecting taxes to pay for pensions to people assumed to live to age 120,” a needless expense.

Mr. Sharpe said those additional 10 years were particularly troubling.

“In Illinois, our pensions start very early, at age 50 for police and fire,” he said. “There’s a 3 percent compounded cost-of-living increase that goes on for life. So the pensions at the later ages of life — I’m talking about after 100, for instance — get very, very large. The person who gets a $50,000 pension at age 50 would get a $250,000 pension by age 100.”

He provided data on public workers’ death rates from the Illinois Insurance Department, which showed that no one in the state ever lived that long. That is why he said the more recent mortality table could lead to needless tax increases.

In a separate interview, Mr. Palermo said he could not discuss his complaint, which has been resolved, but said that by focusing on the oldest years of the mortality tables, Mr. Sharpe was diverting attention from the much more relevant middle years, where the probability of death was much greater in the 1971 table. For 50-year-olds, for example, the risk of death was seen as more than double in 1971 than what is expected in the later table.

Neither man disclosed how the complaint was resolved. But their battle appears to have no clear-cut victor. Mr. Sharpe, who now uses the newer mortality table, no longer consults for La Grange’s police and fire pension trustees. Mr. Palermo did not seek re-election and stepped down in May.

As for the pension system, Mr. Sharpe’s successor changed the mortality projections, and La Grange’s required minimum pension contribution increased by 20 percent. More increases are coming, but the city has tax caps and cannot catch up quickly without cutting other services.
This article has appeared on the AO previously:
http://www.actuarialoutpost.com/actu...d.php?t=296849

http://www.actuarialoutpost.com/actu...94#post8139594
__________________
It's STUMP

LinkedIn Profile

Last edited by campbell; 02-22-2017 at 02:14 PM..
Reply With Quote
  #4  
Old 02-22-2017, 02:14 PM
nonactuarialactuary nonactuarialactuary is offline
Member
Non-Actuary
 
Join Date: May 2008
Posts: 1,808
Default

Quote:
Originally Posted by Enough Exams Already View Post
Disclaimer: I haven't read your filings, nor am I a pension actuary. I don't know anything about you, your case, or the politics of public pension actuarial consulting anywhere, let alone in Illinois.

But I have to ask: While I understand the desire to get the word out about your case, are you sure you want to try it here, in the court of public AO opinion?

Given that anything said here is easily discoverable by counsel, are you sure this is something you want to argue here?


Seems unusual to want public discussion on this until after the lawsuit is resolved. If you just filed earlier this month, it's presumably still ongoing. Although I'm definitely interested in the discussion that could come out of such a thread, it seems like the OP has little to gain and a lot to lose by discussing things out in the open now.
Reply With Quote
  #5  
Old 02-22-2017, 02:26 PM
Tudor's Avatar
Tudor Tudor is offline
Member
CAS
 
Join Date: May 2012
Posts: 55
Default

From the first link.

Quote:
A few months later, his complaint was written up in a village manager’s report and distributed at a public meeting. Mr. Palermo had accused Mr. Sharpe of making statements that were “frequently erroneous and incomplete,” it said. He had accused Mr. Sharpe of misleading the village board and persuading it to incorporate the wrong mortality assumptions into the local tax levy.
IANAL,and I'm operating only on what I read in the NYT link, but it seems to me that the AAA/ABCD is not at fault? Am i missing something?

ETA, I did miss something. From the OP:
Quote:
Originally Posted by Tim Sharpe View Post
My opportunity to present my case to the Academy Disciplinary Committee to disregard the ABCD’s outrageous recommendation was dashed when the Academy/ABCD leaked the ABCD’s confidential recommendation of expulsion.

Last edited by Tudor; 02-22-2017 at 02:30 PM..
Reply With Quote
  #6  
Old 02-22-2017, 02:35 PM
BruteForce's Avatar
BruteForce BruteForce is offline
Member
SOA AAA
 
Join Date: Apr 2013
Studying for More Money
Favorite beer: Wurzel Bier
Posts: 9,643
Default

Quote:
Originally Posted by campbell View Post
Related:

https://www.nytimes.com/2015/07/09/b...ef=topics&_r=1

Quote:
In a phone interview, Mr. Sharpe said that he had been instructed to use the 1971 mortality table by the Illinois Insurance Department.
Seems like an important distinction. I would think that if the department of insurance told you to use a specific mortality table, then you would need to use that mortality table, unless you saw a good reason why it was not applicable.

Note: I also know nothing of this case and am not a pension actuary.
__________________
ASA

Quote:
Originally Posted by Actuary321 View Post
I would really hate to bring Pokémon to a gun fight.
Reply With Quote
  #7  
Old 02-22-2017, 02:42 PM
BruteForce's Avatar
BruteForce BruteForce is offline
Member
SOA AAA
 
Join Date: Apr 2013
Studying for More Money
Favorite beer: Wurzel Bier
Posts: 9,643
Default

Found this with a Google search. Hopefully MPC doesn't mind me posting. I found it an interesting read.

http://stump.marypat.org/article/120...er-assumptions
__________________
ASA

Quote:
Originally Posted by Actuary321 View Post
I would really hate to bring Pokémon to a gun fight.
Reply With Quote
  #8  
Old 02-22-2017, 03:05 PM
bdschobel's Avatar
bdschobel bdschobel is online now
Past SOA President
SOA AAA
 
Join Date: May 2004
Location: Sunrise, FL
Studying for FSA '76
College: MIT '74
Posts: 15,061
Default

Setting aside the merits of the case, I appreciate Tim's post letting all actuaries know that the ABCD is leaky as a sieve. Something similar happened to me about 15 years ago, and while my situation did not affect my career, it did affect my ability to be an effective member of the SOA Board. I overcame this, obviously, going on to be SOA president, but the misbehavior of the ABCD chair, in my case, was absolutely outrageous and should be condemned. It looks like Tim (whom I have never met) is just the latest victim.

The actuarial profession is so very proud of its self-governance, but sometimes it fails miserably.

Bruce
Reply With Quote
  #9  
Old 02-22-2017, 03:30 PM
campbell's Avatar
campbell campbell is offline
Mary Pat Campbell
SOA AAA
 
Join Date: Nov 2003
Location: NY
Studying for duolingo and coursera
Favorite beer: Murphy's Irish Stout
Posts: 79,352
Blog Entries: 6
Default

Quote:
Originally Posted by BruteForce View Post
Found this with a Google search. Hopefully MPC doesn't mind me posting. I found it an interesting read.

http://stump.marypat.org/article/120...er-assumptions
It's all public; I don't mind.

This was the followup post, but it was about a different assumption:
http://stump.marypat.org/article/125...nd-materiality
__________________
It's STUMP

LinkedIn Profile
Reply With Quote
  #10  
Old 02-22-2017, 04:20 PM
Surfohio Surfohio is offline
Member
 
Join Date: Apr 2005
Posts: 1,920
Default

Quote:
Originally Posted by Tudor View Post
From the first link.



IANAL,and I'm operating only on what I read in the NYT link, but it seems to me that the AAA/ABCD is not at fault? Am i missing something?

ETA, I did miss something. From the OP:
Quote:
Originally Posted by NYT Article
A few months later, his complaint was written up in a village manager’s report and distributed at a public meeting.
I think the question is: How did the village manager get wind of the "confidential" report?
Reply With Quote
Reply

Tags
court of public opinion, discoverable evidence, oops too much information

Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off


All times are GMT -4. The time now is 05:41 PM.


Powered by vBulletin®
Copyright ©2000 - 2017, Jelsoft Enterprises Ltd.
*PLEASE NOTE: Posts are not checked for accuracy, and do not
represent the views of the Actuarial Outpost or its sponsors.
Page generated in 0.20993 seconds with 10 queries