Copyright © 2010 by the American Academy of Actuaries 1 Actuarial Board for Counseling and Discipline PROFESSIONALISM IABA Annual Meeting Atlanta, Georgia August 4,

Copyright © 2010 by the American Academy of Actuaries 2 Actuarial Board for Counseling and Discipline Codes of Professional Conduct Candidates’ Code & Members’ Code Robert J. Rietz FSA, MAAA, FCA, MSPA 2

Copyright © 2010 by the American Academy of Actuaries 3 Agenda Background on ABCD Code of Conduct for Candidates Code of Professional Conduct Ethical Dilemma 3

Copyright © 2010 by the American Academy of Actuaries 4 Actuarial Board for Counseling and Discipline ABCD was established in 1991 by the U.S. actuarial organizations to –Investigate alleged violations of the Code of Professional Conduct by members and recommend discipline –Counsel (provide guidance to) members –Mediate disputes between members and others. 4

Copyright © 2010 by the American Academy of Actuaries 5 ABCD Membership Appointed by Selection Committee (Presidents and Presidents-elect of U.S. organizations) Member Area of Practice Paul Fleischacker, ChairpersonHealth Janet Fagan, Vice ChairpersonCasualty Robert Rietz, Vice ChairpersonPension Nancy BehrensLife James GuttermanHealth Curtis HuntingtonLife Kurt PiperPensions John PurpleCasualty Kathleen RileyPension 5

Copyright © 2010 by the American Academy of Actuaries 6 ABCD Processes Follow Article X of AAA bylaws and ABCD Rules of Procedure All ABCD inquiries, guidance and mediation confidential, unless –Actuary makes public or agrees to publication –Court requires disclosure –Redacted, generic situation used for educational purposes 6

Copyright © 2010 by the American Academy of Actuaries 7 An ABCD Inquiry Is a fact-finding effort, not an adversarial forum Examines whether or not an actuary materially violated the Code of Professional Conduct Does not administer discipline, but may recommend discipline to the actuary’s membership organizations 7

Copyright © 2010 by the American Academy of Actuaries 8 ABCD Inquiry Based on complaint from individual, typically –Client –Regulator –Other actuary At ABCD’s initiative –Based on public document that suggests possible violation 8

Copyright © 2010 by the American Academy of Actuaries 9 Request for Guidance Example RFG Topics How do I know if I am qualified? How can I become qualified? How can I do a job that involves more than one area of expertise? How much can I rely on my supervisor? How much can I rely on my staff? How much documentation of my work should I save? What if I leave my company? When should I refuse an assignment? When should I make a complaint about another actuary? When is a violation of the Code material? When is a violation of the Code resolved? 9

Copyright © 2010 by the American Academy of Actuaries 10 Request for Guidance Private guidance by ABCD member –Expresses member’s own opinion Private guidance by ABCD –Expresses views of board Public guidance by ABCD –At request or agreement of actuary(ies) –Provides guidance to profession –Expresses views of board –Usually printed in Contingencies 10

Copyright © 2010 by the American Academy of Actuaries 11 Mediation If all parties agree Facilitate resolution of issue without inquiry 11

Copyright © 2010 by the American Academy of Actuaries Caseload 55 Requests for Guidance 21 Discipline cases –9 pension –6 life –5 casualty –1 health –Evenly split between conduct and practice 12

Copyright © 2010 by the American Academy of Actuaries 13 Contacting the ABCD Letter: 1850 M St., N.W., Suite 300, Washington, D.C Telephone: (202) ; (202) (fax) Website: Contacting any individual ABCD member or ABCD staff (contact information on website) 13

Copyright © 2010 by the American Academy of Actuaries 14 Code of Conduct for Candidates Applicable to Actuarial Candidates Defined as a person who has registered for or completed any SoA (or CAS) educational or evaluative activity, but is NOT a member (ASA, ACAS, CERA). Seven Rules 14

Copyright © 2010 by the American Academy of Actuaries 15 Code of Conduct for Candidates If performing actuarial work, client or employer is defined as the ‘Principal’ ‘Actuarial Services’ are professional services provided to a Principal including rendering advice, recommendations, findings based on actuarial considerations. 15

Copyright © 2010 by the American Academy of Actuaries 16 Code of Conduct for Candidates Effective 1 December 2008 Rule 1: Act honestly, with integrity and competence, to uphold reputation of the profession. Rule 2: Not engage in any conduct involving dishonesty, fraud, deceit or commit any act reflecting adversely on profession. 16

Copyright © 2010 by the American Academy of Actuaries 17 Code of Conduct for Candidates Rule 3: Perform Actuarial Services with courtesy and professional respect and cooperate in Principal’s interest. Rule 4: Shall strictly comply [CAS: adhere] with [letter and spirit of – SoA only] Rules and Regulations. 17

Copyright © 2010 by the American Academy of Actuaries 18 Code of Conduct for Candidates Rule 5: Not authorized to use SoA (or CAS) membership designations until admitted by SoA (or CAS.) Rule 6: Not disclose any confidential information unless authorized by Principal or required by law, statute or regulation. 18

Copyright © 2010 by the American Academy of Actuaries 19 Code of Conduct for Candidates Rule 7: Respond promptly, truthfully and fully to any request for information and cooperate fully with appropriate disciplinary body. 19

Copyright © 2010 by the American Academy of Actuaries 20 U.S. Code of Professional Conduct The revised U.S. Code of Professional Conduct (“Code”) was adopted by the five U.S.-based actuarial organizations (Academy, ASPPA, CAS, CCA & SoA), and took effect 1 January The Code sets forth professional/ethical standards for actuarial members of the five U.S.-based actuarial organizations. 20

Copyright © 2010 by the American Academy of Actuaries 21 U.S. Code of Professional Conduct The Code contains 14 Precepts, along with annotations providing further guidance on adhering to the Precepts. The Precepts are standards that must be followed by credentialed actuaries who are members of one of the U.S.-based organizations or whose member organizations require their members to follow the U.S. Code. 21

Copyright © 2010 by the American Academy of Actuaries 22 U.S. Code of Professional Conduct Precept 1 Professional Integrity: 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 22

Copyright © 2010 by the American Academy of Actuaries 23 U.S. Code of Professional Conduct Precept 2 Qualification Standards : 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. 23

Copyright © 2010 by the American Academy of Actuaries 24 U.S. Code of Professional Conduct Precept 3 Standards of Practice An Actuary shall ensure that Actuarial Services performed by or under the direction of the Actuary satisfy applicable standards of practice. 24

Copyright © 2010 by the American Academy of Actuaries 25 U.S. Code of Professional Conduct Precept 4 Communications An Actuary who issues an Actuarial Communication shall take steps to ensure that is clear and appropriate to the circumstances and audience and satisfies applicable Standards of Practice. 25

Copyright © 2010 by the American Academy of Actuaries 26 U.S. Code of Professional Conduct Precept 5 Communications Appropriately identify the principals and describe the capacity in which you serve. 26

Copyright © 2010 by the American Academy of Actuaries 27 U.S. Code of Professional Conduct Precept 6 Disclosure Make appropriate and timely disclosure to present or prospective principals of sources of all direct and indirect material compensation you or your firm receives that relates to any assignment for that principal. 27

Copyright © 2010 by the American Academy of Actuaries 28 U.S. Code of Professional Conduct Precept 7 Conflict of Interest Do not perform actuarial services unless: 1.your ability to act fairly is unimpaired; 2.you have disclosed conflict to all; AND 3.you secure agreement from all principals. 28

Copyright © 2010 by the American Academy of Actuaries 29 U.S. Code of Professional Conduct Precept 8 Control of Work Product Take reasonable steps to ensure your services are not used to mislead other parties. 29

Copyright © 2010 by the American Academy of Actuaries 30 U.S. Code of Professional Conduct Precept 9 Confidentiality Do not disclose confidential information to another unless authorized by principal OR required by law. 30

Copyright © 2010 by the American Academy of Actuaries 31 U.S. Code of Professional Conduct Precept 10 Courtesy and Cooperation Perform actuarial services with courtesy and professional respect and cooperate with others in the principal’s interest. 31

Copyright © 2010 by the American Academy of Actuaries 32 U.S. Code of Professional Conduct Precept 11 Advertising Do not engage in advertising or business solicitation activities that are false or misleading. 32

Copyright © 2010 by the American Academy of Actuaries 33 U.S. Code of Professional Conduct Precept 12 Titles and Designations Use membership titles and designations only in conformity with authorized practices. 33

Copyright © 2010 by the American Academy of Actuaries 34 U.S. Code of Professional Conduct Precept 13 Violations of the Code If you know of an apparent, unresolved, material violation of the Code by another actuary and have attempted to resolve that violation through discussions that have been unsuccessful, you should disclose the violation to the ABCD. 34

Copyright © 2010 by the American Academy of Actuaries 35 U.S. Code of Professional Conduct Precept 14 Cooperation with ABCD Respond promptly, truthfully and fully to requests from the ABCD subject to restrictions on confidentiality and those imposed by law. 35

Copyright © 2010 by the American Academy of Actuaries 36 ETHICAL DILEMMA 36

Copyright © 2010 by the American Academy of Actuaries 37 Ethical Dilemmas SITUATION: You have prepared a proposal for a major government contract that could be worth $10 million over the next 5 years and, if you win it, would really establish your new firm (which is finding the going pretty tough). 37

Copyright © 2010 by the American Academy of Actuaries 38 Ethical Dilemmas You are now flying to Washington to present to the selection panel, and cannot help noticing that two partners from a (rather sleepy) large professional services firm are sitting in the two seats in front of you. The seat beside you is vacant. 38

Copyright © 2010 by the American Academy of Actuaries 39 Ethical Dilemmas You know who they are, but are pretty sure they don’t know who you are. They are discussing the same project that you are concerned with. They are your key competitor for the business, and if your firm is to survive, you have to win against them, and soon. 39

Copyright © 2010 by the American Academy of Actuaries 40 Ethical Dilemmas Try to answer yes or no, and be prepared to give reasons. A lot of very useful-sounding numbers are mentioned. Is it OK to take notes? It’s too much to write down. OK to turn on your tape recorder? 40

Copyright © 2010 by the American Academy of Actuaries 41 Ethical Dilemmas They leave papers in the seat pocket. They’re not marked “Confidential”. OK to take them? Is it OK to listen actively, hoping to pick up useful information? They are marked “Confidential”. OK to take them now? Etc. 41

Copyright © 2010 by the American Academy of Actuaries 42 Actuarial Board for Counseling and Discipline QUESTIONS? 42

Copyright © 2010 by the American Academy of Actuaries 43 Actuarial Board for Counseling and Discipline THANK YOU ! 43

Copyright © 2010 by the American Academy of Actuaries 44 Contacting the ABCD Letter: 1850 M St., N.W., Suite 300, Washington, D.C Telephone: (202) ; (202) (fax) Website: Contacting any individual ABCD member or ABCD staff (contact information on website) 44