In re AON INVESTMENTS USA INC.

UNITED STATES OF AMERICA 
Before the 
SECURITIES AND EXCHANGE COMMISSION 
 
 
INVESTMENT ADVISERS ACT OF 1940 
Release No. 6536 / January 25, 2024  
 
ADMINISTRATIVE PROCEEDING 
File No. 3-21837 
 
CORRECTED ORDER INSTITUTING 
ADMINISTRATIVE AND CEASE-AND-
DESIST PROCEEDINGS, PURSUANT TO 
SECTIONS 203(e) AND 203(k) OF THE 
INVESTMENT ADVISERS ACT OF 1940, 
MAKING FINDINGS, AND IMPOSING 
REMEDIAL SANCTIONS AND A CEASE-
AND-DESIST ORDER 
 
 
 
 
I. 
The Securities and Exchange Commission (“Commission”) deems it appropriate and in the 
public interest that public administrative and cease-and-desist proceedings be, and hereby are, 
instituted pursuant to Sections 203(e) and 203(k) of the Investment Advisers Act of 1940 
(“Advisers Act”) against Aon Investments USA Inc., fka Aon Hewitt Investment Consulting, Inc. 
(“Aon” or “Respondent”). 
 
II. 
 
In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
of Settlement (the “Offer”) which the Commission has determined to accept. Solely for the 
purpose of these proceedings and any other proceedings brought by or on behalf of the 
Commission, or to which the Commission is a party, and without admitting or denying the findings 
herein, except as to the Commission’s jurisdiction over it and the subject matter of these 
proceedings, which are admitted, Respondent consents to the entry of this Order Instituting 
Administrative and Cease-and-Desist Proceedings Pursuant to Sections 203(e) and 203(k) of the 
Investment Advisers Act of 1940, Making Findings, and Imposing Remedial Sanctions and a 
Cease-and-Desist Order (“Order”), as set forth below. 
In the Matter of 
 
AON INVESTMENTS USA INC., 
fka AON HEWITT INVESTMENT 
CONSULTING, IN., 
 
Respondent. 

2 
 
III. 
On the basis of this Order and Respondent’s Offer, the Commission finds
1 
that: 
 
Summary 
 
This matter involves misconduct by registered investment adviser Aon that was 
inconsistent with its duty to its client, the Pennsylvania Public School Employees’ Retirement 
System (“PSERS”) under the Advisers Act. Since 2013, Aon has acted as an investment adviser 
for PSERS and provided certain investment advisory and investment consulting services to PSERS 
pursuant to a written agreement. As set out in its agreement with PSERS, Aon was responsible for, 
among other things, calculating PSERS’s investment returns, which were then used for calculating 
what is known as “risk share.” Risk share is a provision in the Pennsylvania Pension Code that 
requires certain public school employees to contribute more to the retirement fund if certain 
annualized investment return targets, or “hurdles,” are not met. The investment return hurdle rate 
for the nine-year period ended June 30, 2020 was 6.36%. This meant that, if PSERS’s annualized 
investment return rate for that nine-year period (“Risk Share Return Rate”) was lower than 6.36%, 
the risk share provision would be triggered and public school employees would be required to 
contribute more to the retirement fund going forward. In December 2020, Aon reported to PSERS 
that the Risk Share Return Rate was 6.38% – just high enough to avoid triggering risk share. The 
PSERS Board of Trustees (the “Board”) certified employee contribution rates based on that figure. 
Beginning in June 2020, PSERS staff had repeatedly raised questions about Aon’s 
calculation of the Risk Share Return Rate. Prior to the Board certification, PSERS staff noted, and 
repeatedly asked Aon to investigate, a 37 basis point (0.37%) discrepancy between: (1) the 2015 
performance returns used to calculate the Risk Share Return Rate; and (2) the performance returns 
reported for 2015 in the Commonwealth of Pennsylvania’s Annual Comprehensive Financial 
Report (“Annual Financial Report”). In response to these inquiries from PSERS staff, Aon failed 
to adequately investigate the discrepancy. Aon also misstated to PSERS that the discrepancy was 
not due to errors in the 2015 returns used to calculate the Risk Share Return Rate, but instead 
reflected retroactive adjustments to the returns reported in the Annual Financial Report to reflect 
updated figures received after quarter close. Aon also provided PSERS with two other reasons for 
the 37 basis point discrepancy that Aon had already ruled out as causes for the discrepancy. 
 
In January 2021, Aon identified errors in the underlying performance data used to calculate 
the Risk Share Return Rate. In February 2021, Aon realized that those errors impacted PSERS’s 
overall return and required the recalculation of the Risk Share Return Rate. In March 2021, Aon 
reported to PSERS management and the Board that the corrected Risk Share Return Rate was 
6.34%. This revised result triggered risk share and required additional employee pension 
contributions. Even after the error was discovered, Aon made misstatements and omitted facts in 
communications with PSERS about the extent to which Aon understood the nature and impact of 
the errors. 
 
 
1
 The findings herein are made pursuant to Respondent’s Offer of Settlement and are not binding on any other 
person or entity in this or any other proceeding. 

3 
 
Aon acted inconsistent with its duties as an investment adviser to PSERS by failing to 
adequately investigate the discrepancy between the underlying performance data used by Aon to 
calculate the Risk Share Return Rate and the historically reported returns and by making material 
misstatements and omissions in communications to PSERS concerning the causes of the 
discrepancy and the extent to which Aon understood those causes. As a result of the conduct 
described herein, Aon violated Section 206(2) of the Advisers Act. 
 
Respondent 
 
1. Aon, an Illinois corporation headquartered in Chicago, Illinois, is registered with 
the Commission as an investment adviser and has assets under management of approximately 
$123.92 billion. Aon is wholly owned by Aon Consulting, Inc., an indirect subsidiary of its 
ultimate parent, Aon plc. Aon plc’s stock is registered with the Commission pursuant to Section 
12(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and traded on the NYSE. 
 
Other Relevant Entity 
 
2. PSERS is the administrator of a cost-sharing multiple employer retirement system 
headquartered in Harrisburg, Pennsylvania. Since 1917, PSERS has been serving Pennsylvania’s 
public school employees. PSERS has over 500,000 members. As of June 30, 2022, PSERS’s 
assets totaled approximately $71.2 billion. The Board, which consists of 15 members, is an 
independent administrative Board of the Commonwealth. The members of the Board have 
exclusive control and management of the retirement fund and full power to invest the fund’s 
assets. 
 
Background on Risk Share 
 
3. In 2010, the Pennsylvania legislature adopted certain amendments to the 
Pennsylvania Pension Code, including what is often referred to as the “risk share” provision. 
Generally speaking, “risk share” provides that public school employees hired after June 30, 2011 
will not have to contribute additional money to their pensions when PSERS’s investments are 
performing well, but will have to contribute additional money to their pensions when its 
investments are underperforming compared to the risk share hurdle rate. To determine whether the 
“risk share” provision requiring additional contributions is triggered, PSERS is required to 
compare its investment return rate for the prior ten-year period to the return assumption adopted by 
the Board (i.e., the risk share hurdle rate). If the risk share hurdle rate is not met (i.e. PSERS 
investments are underperforming), then employees hired after June 30, 2011 will be required to 
contribute additional money. Prior to PSERS’s fiscal year 2020, risk share had not previously been 
triggered. 
 
4. In 2013, Aon was engaged as an investment adviser and to provide general 
investment consultant services to PSERS. In this role, Aon provided investment advisory services 
to PSERS, including advising on appropriate investment strategies, suitable investment 
opportunities, and the engagement and retention of investment managers in certain asset classes, 
and providing various performance measurement, risk and attribution services. As part of 

4 
 
measuring performance, Aon was also responsible for calculating PSERS’s investment returns for 
purposes of risk share. During the relevant time period, an Aon lead partner (the “Aon Partner”) 
and another Aon employee (“Aon Employee A”) were assigned to the PSERS engagement. 
 
5. To perform its performance calculations for PSERS, Aon used a third-party 
performance system called PARis. As part of its quarterly process to calculate PSERS’s 
investment returns, Aon analysts imported PSERS’s net asset values (“NAVs”) and cash flows for 
the assets relevant here from PSERS’s custodian bank into the PARis system. Neither PSERS nor 
the Board had access to the PARis system or the technological capability to review the underlying 
source data from the custodian bank. 
 
Aon Did Not Adequately Investigate PSERS’s Concerns About Discrepancies 
Between Historical Returns and Returns Used To Calculate the Risk Share Return Rate 
 
6. In March 2020, PSERS staff began internally discussing the calculation of the Risk 
Share Return Rate for the period ended June 30, 2020. 
 
7. On June 12, 2020, PSERS staff asked Aon Employee A to calculate the return that 
would be required for both the fiscal year and the quarter ending June 30, 2020 to achieve a nine- 
year rate of return of 6.36% (i.e., to meet the risk share hurdle). Later that day, Aon Employee A 
provided PSERS staff with a spreadsheet of historical quarterly returns for purposes of estimating 
the Risk Share Return Rate. Some of the quarterly returns in the spreadsheet provided by Aon did 
not match the historical quarterly returns previously reported by Aon for those periods. On June 
17, 2020, PSERS staff asked Aon Employee A to verify the quarterly return rates provided on the 
spreadsheet for fiscal years 2014-2017 “since some of those are significantly different from what 
we have on record.” About an hour later, Aon Employee A responded that they “just double 
checked and the quarterly returns I sent [on June 12] do match what we have in our system.” 
 
8. On June 19, 2020, PSERS staff asked Aon Employee A whether the discrepancies 
in return rates that had been identified were due to subsequent adjustments to the return rates that 
were reported in prior quarterly reports. On the following day, Aon Employee A responded, “I 
assume so, yes but I don’t know what historical numbers you’re referencing.” 
 
9. In response, on June 29, 2020, PSERS staff sent a revised version of the June 12, 
2020 quarterly return spreadsheet to Aon Employee A, with an added column comparing those 
returns with the historically reported returns for fiscal years 2015-2017. The difference between 
those figures for the quarter ended June 30, 2015 was particularly large – over 33 basis points 
( - 0.1723 vs. - 0.5087). 
 
10. In the email transmitting this spreadsheet to Aon Employee A, PSERS staff stated, 
“Of particular interest is the June 2015 quarter which improved over 33 basis points. Can you 
verify for us that the changes in the quarterly returns for these three years are all due to subsequent 
adjustments?” 
11. On July 30, Aon Employee A responded to PSERS that the discrepancies in return 
rates were due to retroactive adjustments to the historically reported returns. The only step that 

5 
 
Aon Employee A took to confirm that Aon’s historically reported quarterly performance returns 
were correct was to check that the returns in the spreadsheet matched the returns in the PARis 
system. Despite the 33 basis point discrepancy, Aon Employee A did not check whether the 
original source data from the custodian bank, to which Aon had access, matched the data in the 
PARis performance system. 
 
Aon Made Material Misstatements and Omissions 
to PSERS About the Reasons for the Reporting Discrepancies 
 
12. On August 12, 2020 , the then-Treasurer of the Commonwealth of Pennsylvania 
sent a letter to PSERS management expressing concern about the reporting differences. In the 
letter, the Treasurer wrote, in relevant part: 
I have been unable to locate past documentation provided to the Board that would 
explain these reporting differences. Perhaps something has been missed, but this 
issue has raised additional concerns since a comparison of [Annual Financial 
Report] returns and the most recent Aon returns appear to show changes in every 
year we reviewed. While some of the revisions appear within an expected range of 
a one to two basis point adjustment, there are years in which Aon reported greater 
changes. For example, there appears to be a thirty-seven basis point (37bps) 
increase from the originally released 2014/2015 fiscal rate of return....”
2
 
 
(Emphasis added.) 
 
13. Later that day, PSERS’s Chief Investment Officer (“CIO”) forwarded the 
Treasurer’s letter to the Aon Partner. The Aon Partner then forwarded the letter to Aon 
Employee A, writing that “[t]he change of the FY returns in prior years is a result of the 
restatement of some Private Equity I believe.” 
 
14. On the morning of August 17, 2020, Aon Employee A emailed the Aon Partner 
suggesting possible causes for the 37 basis point discrepancy in reported returns for fiscal year 
2015, including a plan restructuring that occurred in 2019 (the “2019 Restructuring”) and 
adjustments to a particular investment firm’s performance returns for fiscal year 2016 (the “2016 
Adjustment”). By the afternoon of August 17, 2020, however, Aon had ruled out those events as 
the causes for the 37 basis point discrepancy in the reported performance returns for fiscal year 
2015. 
 
15. On August 18, 2020, PSERS’s CIO circulated a spreadsheet comparing PSERS’s 
historical performance returns, as calculated and reported by Aon, to the returns reported in 
PSERS’s Annual Financial Reports and noted that the “net fiscal year differences are immaterial.” 
The Aon Partner reached the same conclusion and responded to PSERS’s CIO that there was only 
one fiscal year in which the differences between the returns used for calculating the Risk Share 
 
2
 As noted above, the 33 basis point change is for the quarter ended June 30, 2015; the 37 basis point change is for 
the entire fiscal year ended June 30, 2015. 

6 
 
Return Rate and those reported in the Annual Financial Report were greater than 10 basis points 
and highlighted fiscal year 2015. The CIO requested an explanation, responding, “We should 
probably find out why the return in 2015 changed so much.” The Aon Partner does not appear to 
have responded to the email. 
 
16. Between August 25, 2020 and September 1, 2020, PSERS and the Aon Partner 
exchanged drafts of responses to the Treasurer’s letter, with Aon taking the lead on, and providing 
the language in response to, questions concerning the discrepancy between the 2015 performance 
returns used to calculate the Risk Share Return Rate and the historically reported performance 
returns in the Annual Financial Report. 
 
17. On August 25, 2020, the Aon Partner provided inserts for PSERS’s response to the 
Treasurer’s letter, including language about the reasons for the difference between the 2015 returns 
used for the Risk Share Return Rate calculation and the historically reported returns: 
 
A combination of revisions to the market values and cash flows for some Private 
Credit funds [i.e., the 2016 Adjustment] as well as the opening up of the 
performance books during the 3Q19 report to restructure the composites to reflect 
the new Investment Policy Statement division of public and private markets [i.e., 
the 2019 Restructuring] resulted in the re-calculation of prior fiscal years. 
 
Aon knew or should have known this was inaccurate. As described above, only a week earlier, 
Aon had ruled out these two explanations, which refer to the 2016 Adjustment and the 2019 
Restructuring, as causes of the 37 basis point discrepancy in reported returns for fiscal year 2015. 
 
18. On August 26, 2020, the Aon Partner sent a revised draft of this paragraph with 
Aon’s “further comments/edits” to PSERS, which included the addition of a sentence affirmatively 
stating that “[i]t was the combination of these two changes [noted in paragraph 17 above] that led 
to changes in the performance reported by Aon.” Once again, the Aon Partner inaccurately 
attributed the 2015 difference in performance returns to the 2016 Adjustment and the 2019 
Restructuring. 
 
19. Aon also misstated that the 2015 returns that Aon used to calculate the Risk Share 
Return Rate were not erroneous. On August 27, 2020, PSERS’s CIO sent the Aon Partner another 
draft of the response letter to the Treasurer. Later that day, the Aon Partner sent back a revised 
version of the letter which included the same paragraph, but also added two sentences to the end of 
that paragraph in response to a comment from PSERS about the adjustments to the 2015 returns 
reported in the Annual Financial Report not being in error: “We note that the originally reported 
returns in 2015 were not in error but were correct based on the NAVs and cashflows available at 
the time. The adjustments were made to reflect revised information.” Aon was at least negligent 
in making that representation because it did not know the reason for the discrepancy between the 
reported returns. 
 
20. On August 31, 2020, the Aon Partner and PSERS staff, including PSERS’s CIO, 
had a conference call to discuss the most recent version of the response letter and “agreed upon 

7 
 
numerous updates.” As one of these updates, PSERS staff, based on information provided by Aon, 
revised the relevant paragraph and added a heading to further clarify that the explanations in that 
paragraph specifically applied to the 2015 returns, as follows: 
 
FY 2015 Reporting Adjustment 
Aon has re-reviewed the returns for Fiscal Year 2015 and has verified that the 
revised returns as reported in the March 31, 2020 report are correct based on the 
new revised NAVs received for some private market funds after the fiscal year 
close. A combination of (1) revisions to the market values and cash flows for some 
Private Credit funds [i.e., the 2016 Adjustment] and (2) the opening up of the 
performance books during the third quarter 2019 report to restructure the 
composites to reflect the new Investment Policy Statement division of public and 
private markets [i.e., the 2019 Restructuring] resulted in the re-calculation of prior 
fiscal years. It was the combination of these two changes that led to changes in the 
performance reported by Aon. The originally reported returns in 2015 were based 
on the NAVs and cashflows available at the time. The adjustments reflect revised 
information according to policy. 
 
Representations that the discrepancy in reported performance returns was not due to errors 
appeared in other sections of this draft, including the following, “The use of ‘errors’ is incorrect. 
As shown above, these are adjustments that are made as more data is reported to PSERS. The 
adjustments are not errors in reporting.” These explanations were incorrect as Aon later learned 
that the underlying data errors, not subsequent adjustments to returns, accounted for the 
discrepancy. 
 
21. On September 1, 2020, the Aon Partner approved the final version of the response 
letter to the Treasurer, which included the representations in paragraph 20 above, despite the fact 
that: (1) Aon still did not know what had caused the 2015 reporting discrepancy; and (2) Aon, had, 
in fact, already ruled out the two causes described in the letter. PSERS sent the letter to the 
Treasurer later that day. Notwithstanding the questions raised in the Treasurer’s letter, Aon did not 
check whether original performance data from the custodian bank, to which Aon continued to have 
access, matched the data in the PARis system. 
Aon’s Role in Certification of Employee Contribution Rates 
22. In December 2020, Aon reported to PSERS that the Risk Share Return Rate was 
6.38% – just high enough to avoid triggering risk share. On December 3, 2020, the Board held a 
regular meeting to, among other things, review PSERS’s performance returns for risk share. At the 
meeting, a member of the Board asked PSERS’s Chief Financial Officer (“CFO”) whether the Risk 
Share Return Rate calculation was made using the values in the Annual Financial Report. The 
CFO responded that he had not run the calculation using those values, but offered to do so. 
 
23. After this question was posed, the Aon Partner and PSERS’s CIO exchanged emails 
during the meeting about what the Risk Share Return Rate would be if they used the Annual 
Financial Report values. Both concluded that, using those values, the Risk Share Return Rate 
would be 6.34%. This figure was below the 6.36% statutory hurdle rate, and would have triggered 

8 
 
the risk share provision and required teachers to make increased contributions. Despite the 
importance of this question to PSERS, the Aon Partner did not initiate further investigation into the 
cause of the discrepancy in reported returns and assured PSERS that the 6.38% result was correct, 
writing to the CIO: 
 
As you know we are very confident that the adjusted returns are accurate reflecting 
the revised information that we received on the valuation and therefore we are very 
confident that the 6.38% reported nine-year return is an accurate representation of 
PSERS’ investment returns during the period. 
24. Notwithstanding the question posed at the Board meeting, Aon did not check 
whether the source data from the custodian bank matched the data in the PARis system. The 
Board then certified employee contribution rates based on Aon’s representations to PSERS 
concerning the accuracy of the investment returns. 
Aon Identified Reporting Errors, But Did Not 
Fully Investigate and Disclose the Impact of the Errors 
25. Beginning on the day after the Board’s certification, Aon began to realize that there 
were errors that caused the 2015 discrepancy in performance returns. On December 4, 2020, the 
day after the certification, during a routine review of an Aon draft financial report for third quarter 
2020, PSERS staff noticed that Aon’s calendar year 2015 performance figures for a certain 
portfolio composite (the “Absolute Return”)
3 
did not match figures that another PSERS consultant 
was reporting for the same year. On the same day, PSERS asked Aon to investigate the 
discrepancy. 
 
26. On December 9, 2020, PSERS staff asked Aon Employee A whether the 
discrepancy in the 2015 calendar year return noticed on December 4, 2020 would have any impact 
on the Total Fund return, which would then impact the Risk Share Return Rate. (The “Total Fund” 
return referred to the retirement fund’s overall investment return.) Aon Employee A did not 
immediately respond. At or around this time, despite having previously received repeated inquiries 
from PSERS staff about the discrepancies in the performance returns for 2015, Aon first began the 
process of investigating whether the NAVs and cash flows in the source data from the custodian 
bank matched the data in the PARis performance system used by Aon. 
 
27. On December 10, 2020, another Aon staff member emailed a representative of the 
software company which owned the PARis system, “We think one of the [Aon] analysts 
accidentally wiped accounting data from PSERS for April 2015 and need to figure out how to 
restore/fix.” Aon did not report this inquiry to PSERS at the time. 
 
 
 
 
3
 A composite is an aggregation of one or more portfolios managed according to a similar investment mandate, 
objective or strategy. PSERS has a large number of composite returns that rolled up into the Total Fund return, one 
of which was for hedge funds and called the Absolute Return Composite. 

9 
 
28. On January 7, 2021, Aon Employee A sent an updated draft of the Aon financial 
report for third quarter 2020 to PSERS. The transmittal of the draft did not address the question of 
whether the Total Fund return was impacted. 
 
29. On January 8, 2021, PSERS staff approved the draft report and requested that Aon 
deliver the final version of the quarterly report. On January 12, 2021, an Aon employee explained 
that Aon would provide the final quarterly report, but that the Aon Partner wanted to talk to 
PSERS’s CIO before the final version was sent to PSERS. 
 
30. On January 13, 2021, the Aon Partner called PSERS’s CIO to tell him that there 
was an issue that had impacted a number of historical composite returns. The CIO asked the Aon 
Partner whether the error affected the Total Fund performance, which would require recalculation 
of the Risk Share Return Rate. According to the CIO, the Aon Partner assured the CIO that the 
issue would not affect the risk share calculation and was at the composite level. The PSERS CIO 
requested that the Aon Partner prepare a memorandum to explain Aon’s finding. 
 
31. On February 17, 2021, the Aon Partner called PSERS’s CIO to inform him for the 
first time that the error had impacted PSERS’s Total Fund performance calculation, and that 
therefore the Risk Share Return Rate had to be recalculated. Later that day, the Aon Partner hosted 
a larger group call, during which the Aon Partner told PSERS that the error related to the quarter 
ended June 30, 2015, and reiterated that it impacted the Total Fund return. 
 
32. On March 5, 2021, the Aon Partner, at PSERS’s request, provided a memo 
explaining the errors. In the memo, Aon concluded that the correct Risk Share Return Rate was 
6.34%, falling below the 6.36% statutory risk share hurdle rate. In the memo, the Aon Partner 
made a number of representations about the error and was at least negligent in making those 
representations because, at that point, Aon still did not know the causes of the error. For example, 
the Aon Partner attributed the error to “data corruption” that “was due to an error by an analyst in 
uploading NAV and cashflow data from the [custodian bank] system into the PARis performance 
system Aon uses.” This statement was misleading because it was still not clear to Aon what had 
caused the error and it was merely a working theory. The Aon Partner also represented that the 
data corruption had “impacted a few asset class composites in the public markets.” This statement 
was misleading because it understated the extent of the impact of the issue when, at that time, Aon 
did not know the scope of the error’s impact. In fact, many, if not most, of the accounts sourced 
from the custodian bank were impacted by systemic erroneous revisions that were made in the 
PARis system in May 2016 (and not fully understood until late 2022). 
 
33. On April 16, 2021, Aon sent an update letter to PSERS’s CIO. Although the Aon 
Partner had given PSERS the impression that Aon had identified and determined the exact cause of 
the error, the update letter referred to Aon’s “continued review” and indicated that “Aon fully 
understands that its responsibility to report to PSERS is ongoing and will supplement the 
information related here when and to the extent appropriate and, of course, as may be responsive to 
any questions PSERS may have.” The letter further explained that “all indications are that the 
issues here reflect inadvertent clerical mistakes at a data-entry level.” The letter concluded that 

10 
 
“Aon is determined to ascertain all pertinent details surrounding the issues here and will provide it 
as our comprehensive review continues.” 
 
34. On April 19, 2021, the Board voted to recertify the employee contribution rates 
originally approved by the Board on December 3, 2020, based on the corrected Risk Share Return 
Rate of 6.34%. The recertification required additional contributions from certain public school 
employees beginning in July 2021. 
Violations 
35. As a result of the conduct described above, Aon willfully
4 
violated Section 206(2) 
of the Advisers Act, which prohibits an investment adviser from engaging “in any transaction, 
practice or course of business which operates as a fraud or deceit upon any client or prospective 
client.” Scienter is not required to establish a violation of Section 206(2), but rather a violation 
may rest on a finding of negligence. SEC v. Steadman, 967 F.2d 636, 643 n.5 (D.C. Cir. 1992) 
(citing SEC v. Capital Gains Research Bureau, Inc., 375 U.S. 180, 194-195 (1963)). 
Disgorgement 
 
36. The disgorgement and prejudgment interest ordered in Section IV, paragraph C is 
consistent with equitable principles and does not exceed Respondent’s net profits from its 
violations, and will be distributed to harmed investors to the extent feasible. The Commission will 
hold funds paid pursuant to Section IV, paragraph C in an account at the United States Treasury 
pending distribution. Upon approval of the distribution final accounting by the Commission, any 
amounts remaining that are infeasible to return to investors, and any amounts returned to the 
Commission in the future that are infeasible to return to investors, may be transferred to the general 
fund of the U.S. Treasury, subject to Section 21F(g)(3) of the Exchange Act. 
Remedial Efforts 
 
37. In determining to accept the Offer, the Commission considered remedial acts 
promptly undertaken by Aon and cooperation afforded the Commission staff. 
IV. 
In view of the foregoing, the Commission deems it appropriate and in the public interest to 
impose the sanctions agreed to in Respondent’s Offer. 
Accordingly, pursuant to Sections 203(e) and 203(k) of the Advisers Act, it is hereby 
ORDERED that: 
 
 
4
 “Willfully,” for purposes of imposing relief under Section 203(e) of the Advisers Act, “‘means no more than that the 
person charged with the duty knows what he is doing.’” Wonsover v. SEC, 205 F.3d 408, 414 (D.C. Cir. 2000) 
(quoting Hughes v. SEC, 174 F.2d 969, 977 (D.C. Cir. 1949)). There is no requirement that the actor “also be aware 
that he is violating one of the Rules or Acts.” Tager v. SEC, 344 F.2d 5, 8 (2d Cir. 1965). 

11 
 
A. Respondent cease and desist from committing or causing any violations and any 
future violations of Section 206(2) of the Advisers Act. 
 
B. Respondent is censured. 
 
C. Respondent shall, within 10 days of the entry of this Order, pay a civil money 
penalty in the amount of $1,000,000, disgorgement of $495,098.50 and prejudgment interest of 
$47,089.29 to the Securities and Exchange Commission. If timely payment of disgorgement or 
prejudgment interest is not made, additional interest shall accrue pursuant to SEC Rule of Practice 
600. If timely payment of the civil penalty is not made, additional interest shall accrue pursuant to 
31 U.S.C. §3717. 
 
Payment must be made in one of the following ways: 
 
(1) Respondent may transmit payment electronically to the Commission, which 
will provide detailed ACH transfer/Fedwire instructions upon request; 
 
(2) Respondent may make direct payment from a bank account via Pay.gov 
through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or 
 
(3) Respondent may pay by certified check, bank cashier’s check, or United 
States postal money order, made payable to the Securities and Exchange 
Commission and hand-delivered or mailed to: 
 
Enterprise Services Center 
Accounts Receivable Branch 
HQ Bldg., Room 181, AMZ-341 
6500 South MacArthur Boulevard 
Oklahoma City, OK 73169 
 
Payments by check or money order must be accompanied by a cover letter identifying Aon as the 
Respondent in these proceedings and the file number of these proceedings; a copy of the cover 
letter and check or money order must be sent to Assistant Director Kevin B. Currid, Division of 
Enforcement, Securities and Exchange Commission, 33 Arch Street, Boston, MA 02110. 
 
D. Pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, a Fair Fund is created 
for the disgorgement, prejudgment interest and penalties referenced in paragraph IV, Section C 
above. This Fair Fund may be combined with any fund established for the benefit of harmed 
investors in In the Matter of Claire P. Shaughnessy, Admin. Proc. No. 3-21836, Advisers Act of 
1940, Rel. No. 6535 (Jan. 25, 2024). Amounts ordered to be paid as civil money penalties 
pursuant to this Order shall be treated as penalties paid to the government for all purposes, 
including all tax purposes. To preserve the deterrent effect of the civil penalty, Respondent agrees 
that in any Related Investor Action, it shall not argue that it is entitled to, nor shall it benefit by, 
offset or reduction of any award of compensatory damages by the amount of any part of 
Respondent’s payment of a civil penalty in this action (“Penalty Offset”). If the court in any 
Related Investor Action grants such a Penalty Offset, Respondent agrees that it shall, within 30 

12 
 
days after entry of a final order granting the Penalty Offset, notify the Commission’s counsel in 
this action and pay the amount of the Penalty Offset to the Securities and Exchange Commission. 
Such a payment shall not be deemed an additional civil penalty and shall not be deemed to change the 
amount of the civil penalty imposed in this proceeding. For purposes of this paragraph, a “Related Investor 
Action” means a private damages action brought against Respondent by or on behalf of one or more 
investors based on substantially the same facts as alleged in the Order instituted by the Commission in this 
proceeding. 
 
By the Commission. 
 
 
 
Vanessa A. Countryman 
Secretary 

UNITED STATES OF AMERICA 

Before the 

SECURITIES AND EXCHANGE COMMISSION 

 

 

INVESTMENT ADVISERS ACT OF 1940 

Release No. 6536 / January 25, 2024  

 

ADMINISTRATIVE PROCEEDING 

File No. 3-21837 

 

CORRECTED ORDER INSTITUTING 

ADMINISTRATIVE AND CEASE-AND-

DESIST PROCEEDINGS, PURSUANT TO 

SECTIONS 203(e) AND 203(k) OF THE 

INVESTMENT ADVISERS ACT OF 1940, 

MAKING FINDINGS, AND IMPOSING 

REMEDIAL SANCTIONS AND A CEASE-

AND-DESIST ORDER 

 

 

 

 

I. 

The Securities and Exchange Commission (“Commission”) deems it appropriate and in the 

public interest that public administrative and cease-and-desist proceedings be, and hereby are, 

instituted pursuant to Sections 203(e) and 203(k) of the Investment Advisers Act of 1940 

(“Advisers Act”) against Aon Investments USA Inc., fka Aon Hewitt Investment Consulting, Inc. 

(“Aon” or “Respondent”). 

 

II. 

 

In anticipation of the institution of these proceedings, Respondent has submitted an Offer 

of Settlement (the “Offer”) which the Commission has determined to accept. Solely for the 

purpose of these proceedings and any other proceedings brought by or on behalf of the 

Commission, or to which the Commission is a party, and without admitting or denying the findings 

herein, except as to the Commission’s jurisdiction over it and the subject matter of these 

proceedings, which are admitted, Respondent consents to the entry of this Order Instituting 

Administrative and Cease-and-Desist Proceedings Pursuant to Sections 203(e) and 203(k) of the 

Investment Advisers Act of 1940, Making Findings, and Imposing Remedial Sanctions and a 

Cease-and-Desist Order (“Order”), as set forth below. 

In the Matter of 

 

AON INVESTMENTS USA INC., 

fka AON HEWITT INVESTMENT 

CONSULTING, IN., 

 

Respondent. 



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III. 

On the basis of this Order and Respondent’s Offer, the Commission finds1 that: 

 

Summary 

 

This matter involves misconduct by registered investment adviser Aon that was 

inconsistent with its duty to its client, the Pennsylvania Public School Employees’ Retirement 

System (“PSERS”) under the Advisers Act. Since 2013, Aon has acted as an investment adviser 

for PSERS and provided certain investment advisory and investment consulting services to PSERS 

pursuant to a written agreement. As set out in its agreement with PSERS, Aon was responsible for, 

among other things, calculating PSERS’s investment returns, which were then used for calculating 

what is known as “risk share.” Risk share is a provision in the Pennsylvania Pension Code that 

requires certain public school employees to contribute more to the retirement fund if certain 

annualized investment return targets, or “hurdles,” are not met. The investment return hurdle rate 

for the nine-year period ended June 30, 2020 was 6.36%. This meant that, if PSERS’s annualized 

investment return rate for that nine-year period (“Risk Share Return Rate”) was lower than 6.36%, 

the risk share provision would be triggered and public school employees would be required to 

contribute more to the retirement fund going forward. In December 2020, Aon reported to PSERS 

that the Risk Share Return Rate was 6.38% – just high enough to avoid triggering risk share. The 

PSERS Board of Trustees (the “Board”) certified employee contribution rates based on that figure. 

Beginning in June 2020, PSERS staff had repeatedly raised questions about Aon’s 

calculation of the Risk Share Return Rate. Prior to the Board certification, PSERS staff noted, and 

repeatedly asked Aon to investigate, a 37 basis point (0.37%) discrepancy between: (1) the 2015 

performance returns used to calculate the Risk Share Return Rate; and (2) the performance returns 

reported for 2015 in the Commonwealth of Pennsylvania’s Annual Comprehensive Financial 

Report (“Annual Financial Report”). In response to these inquiries from PSERS staff, Aon failed 

to adequately investigate the discrepancy. Aon also misstated to PSERS that the discrepancy was 

not due to errors in the 2015 returns used to calculate the Risk Share Return Rate, but instead 

reflected retroactive adjustments to the returns reported in the Annual Financial Report to reflect 

updated figures received after quarter close. Aon also provided PSERS with two other reasons for 

the 37 basis point discrepancy that Aon had already ruled out as causes for the discrepancy. 

 

In January 2021, Aon identified errors in the underlying performance data used to calculate 

the Risk Share Return Rate. In February 2021, Aon realized that those errors impacted PSERS’s 

overall return and required the recalculation of the Risk Share Return Rate. In March 2021, Aon 

reported to PSERS management and the Board that the corrected Risk Share Return Rate was 

6.34%. This revised result triggered risk share and required additional employee pension 

contributions. Even after the error was discovered, Aon made misstatements and omitted facts in 

communications with PSERS about the extent to which Aon understood the nature and impact of 

the errors. 
 

 

1 The findings herein are made pursuant to Respondent’s Offer of Settlement and are not binding on any other 

person or entity in this or any other proceeding. 



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Aon acted inconsistent with its duties as an investment adviser to PSERS by failing to 

adequately investigate the discrepancy between the underlying performance data used by Aon to 

calculate the Risk Share Return Rate and the historically reported returns and by making material 

misstatements and omissions in communications to PSERS concerning the causes of the 

discrepancy and the extent to which Aon understood those causes. As a result of the conduct 

described herein, Aon violated Section 206(2) of the Advisers Act. 

 

Respondent 

 

1. Aon, an Illinois corporation headquartered in Chicago, Illinois, is registered with 

the Commission as an investment adviser and has assets under management of approximately 

$123.92 billion. Aon is wholly owned by Aon Consulting, Inc., an indirect subsidiary of its 

ultimate parent, Aon plc. Aon plc’s stock is registered with the Commission pursuant to Section 

12(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and traded on the NYSE. 

 

Other Relevant Entity 

 

2. PSERS is the administrator of a cost-sharing multiple employer retirement system 

headquartered in Harrisburg, Pennsylvania. Since 1917, PSERS has been serving Pennsylvania’s 

public school employees. PSERS has over 500,000 members. As of June 30, 2022, PSERS’s 

assets totaled approximately $71.2 billion. The Board, which consists of 15 members, is an 

independent administrative Board of the Commonwealth. The members of the Board have 

exclusive control and management of the retirement fund and full power to invest the fund’s 

assets. 

 

Background on Risk Share 

 

3. In 2010, the Pennsylvania legislature adopted certain amendments to the 

Pennsylvania Pension Code, including what is often referred to as the “risk share” provision. 

Generally speaking, “risk share” provides that public school employees hired after June 30, 2011 

will not have to contribute additional money to their pensions when PSERS’s investments are 

performing well, but will have to contribute additional money to their pensions when its 

investments are underperforming compared to the risk share hurdle rate. To determine whether the 

“risk share” provision requiring additional contributions is triggered, PSERS is required to 

compare its investment return rate for the prior ten-year period to the return assumption adopted by 

the Board (i.e., the risk share hurdle rate). If the risk share hurdle rate is not met (i.e. PSERS 

investments are underperforming), then employees hired after June 30, 2011 will be required to 

contribute additional money. Prior to PSERS’s fiscal year 2020, risk share had not previously been 

triggered. 

 

4. In 2013, Aon was engaged as an investment adviser and to provide general 

investment consultant services to PSERS. In this role, Aon provided investment advisory services 

to PSERS, including advising on appropriate investment strategies, suitable investment 

opportunities, and the engagement and retention of investment managers in certain asset classes, 

and providing various performance measurement, risk and attribution services. As part of 



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measuring performance, Aon was also responsible for calculating PSERS’s investment returns for 

purposes of risk share. During the relevant time period, an Aon lead partner (the “Aon Partner”) 

and another Aon employee (“Aon Employee A”) were assigned to the PSERS engagement. 

 

5. To perform its performance calculations for PSERS, Aon used a third-party 

performance system called PARis. As part of its quarterly process to calculate PSERS’s 

investment returns, Aon analysts imported PSERS’s net asset values (“NAVs”) and cash flows for 

the assets relevant here from PSERS’s custodian bank into the PARis system. Neither PSERS nor 

the Board had access to the PARis system or the technological capability to review the underlying 

source data from the custodian bank. 

 

Aon Did Not Adequately Investigate PSERS’s Concerns About Discrepancies 

Between Historical Returns and Returns Used To Calculate the Risk Share Return Rate 

 

6. In March 2020, PSERS staff began internally discussing the calculation of the Risk 

Share Return Rate for the period ended June 30, 2020. 

 

7. On June 12, 2020, PSERS staff asked Aon Employee A to calculate the return that 

would be required for both the fiscal year and the quarter ending June 30, 2020 to achieve a nine- 

year rate of return of 6.36% (i.e., to meet the risk share hurdle). Later that day, Aon Employee A 

provided PSERS staff with a spreadsheet of historical quarterly returns for purposes of estimating 

the Risk Share Return Rate. Some of the quarterly returns in the spreadsheet provided by Aon did 

not match the historical quarterly returns previously reported by Aon for those periods. On June 

17, 2020, PSERS staff asked Aon Employee A to verify the quarterly return rates provided on the 

spreadsheet for fiscal years 2014-2017 “since some of those are significantly different from what 

we have on record.” About an hour later, Aon Employee A responded that they “just double 

checked and the quarterly returns I sent [on June 12] do match what we have in our system.” 

 

8. On June 19, 2020, PSERS staff asked Aon Employee A whether the discrepancies 

in return rates that had been identified were due to subsequent adjustments to the return rates that 

were reported in prior quarterly reports. On the following day, Aon Employee A responded, “I 

assume so, yes but I don’t know what historical numbers you’re referencing.” 

 

9. In response, on June 29, 2020, PSERS staff sent a revised version of the June 12, 

2020 quarterly return spreadsheet to Aon Employee A, with an added column comparing those 

returns with the historically reported returns for fiscal years 2015-2017. The difference between 

those figures for the quarter ended June 30, 2015 was particularly large – over 33 basis points 

( - 0.1723 vs. - 0.5087). 

 

10. In the email transmitting this spreadsheet to Aon Employee A, PSERS staff stated, 

“Of particular interest is the June 2015 quarter which improved over 33 basis points. Can you 

verify for us that the changes in the quarterly returns for these three years are all due to subsequent 

adjustments?” 

11. On July 30, Aon Employee A responded to PSERS that the discrepancies in return 

rates were due to retroactive adjustments to the historically reported returns. The only step that 



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Aon Employee A took to confirm that Aon’s historically reported quarterly performance returns 

were correct was to check that the returns in the spreadsheet matched the returns in the PARis 

system. Despite the 33 basis point discrepancy, Aon Employee A did not check whether the 

original source data from the custodian bank, to which Aon had access, matched the data in the 

PARis performance system. 

 

Aon Made Material Misstatements and Omissions 

to PSERS About the Reasons for the Reporting Discrepancies 

 

12. On August 12, 2020 , the then-Treasurer of the Commonwealth of Pennsylvania 

sent a letter to PSERS management expressing concern about the reporting differences. In the 

letter, the Treasurer wrote, in relevant part: 

I have been unable to locate past documentation provided to the Board that would 

explain these reporting differences. Perhaps something has been missed, but this 

issue has raised additional concerns since a comparison of [Annual Financial 

Report] returns and the most recent Aon returns appear to show changes in every 

year we reviewed. While some of the revisions appear within an expected range of 

a one to two basis point adjustment, there are years in which Aon reported greater 

changes. For example, there appears to be a thirty-seven basis point (37bps) 

increase from the originally released 2014/2015 fiscal rate of return….”2
 

 

(Emphasis added.) 

 

13. Later that day, PSERS’s Chief Investment Officer (“CIO”) forwarded the 

Treasurer’s letter to the Aon Partner. The Aon Partner then forwarded the letter to Aon 

Employee A, writing that “[t]he change of the FY returns in prior years is a result of the 

restatement of some Private Equity I believe.” 

 

14. On the morning of August 17, 2020, Aon Employee A emailed the Aon Partner 

suggesting possible causes for the 37 basis point discrepancy in reported returns for fiscal year 

2015, including a plan restructuring that occurred in 2019 (the “2019 Restructuring”) and 

adjustments to a particular investment firm’s performance returns for fiscal year 2016 (the “2016 

Adjustment”). By the afternoon of August 17, 2020, however, Aon had ruled out those events as 

the causes for the 37 basis point discrepancy in the reported performance returns for fiscal year 

2015. 

 

15. On August 18, 2020, PSERS’s CIO circulated a spreadsheet comparing PSERS’s 

historical performance returns, as calculated and reported by Aon, to the returns reported in 

PSERS’s Annual Financial Reports and noted that the “net fiscal year differences are immaterial.” 

The Aon Partner reached the same conclusion and responded to PSERS’s CIO that there was only 

one fiscal year in which the differences between the returns used for calculating the Risk Share 

 

2 As noted above, the 33 basis point change is for the quarter ended June 30, 2015; the 37 basis point change is for 

the entire fiscal year ended June 30, 2015. 



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Return Rate and those reported in the Annual Financial Report were greater than 10 basis points 

and highlighted fiscal year 2015. The CIO requested an explanation, responding, “We should 

probably find out why the return in 2015 changed so much.” The Aon Partner does not appear to 

have responded to the email. 

 

16. Between August 25, 2020 and September 1, 2020, PSERS and the Aon Partner 

exchanged drafts of responses to the Treasurer’s letter, with Aon taking the lead on, and providing 

the language in response to, questions concerning the discrepancy between the 2015 performance 

returns used to calculate the Risk Share Return Rate and the historically reported performance 

returns in the Annual Financial Report. 

 

17. On August 25, 2020, the Aon Partner provided inserts for PSERS’s response to the 

Treasurer’s letter, including language about the reasons for the difference between the 2015 returns 

used for the Risk Share Return Rate calculation and the historically reported returns: 

 

A combination of revisions to the market values and cash flows for some Private 

Credit funds [i.e., the 2016 Adjustment] as well as the opening up of the 

performance books during the 3Q19 report to restructure the composites to reflect 

the new Investment Policy Statement division of public and private markets [i.e., 

the 2019 Restructuring] resulted in the re-calculation of prior fiscal years. 

 

Aon knew or should have known this was inaccurate. As described above, only a week earlier, 

Aon had ruled out these two explanations, which refer to the 2016 Adjustment and the 2019 

Restructuring, as causes of the 37 basis point discrepancy in reported returns for fiscal year 2015. 

 

18. On August 26, 2020, the Aon Partner sent a revised draft of this paragraph with 

Aon’s “further comments/edits” to PSERS, which included the addition of a sentence affirmatively 

stating that “[i]t was the combination of these two changes [noted in paragraph 17 above] that led 

to changes in the performance reported by Aon.” Once again, the Aon Partner inaccurately 

attributed the 2015 difference in performance returns to the 2016 Adjustment and the 2019 

Restructuring. 

 

19. Aon also misstated that the 2015 returns that Aon used to calculate the Risk Share 

Return Rate were not erroneous. On August 27, 2020, PSERS’s CIO sent the Aon Partner another 

draft of the response letter to the Treasurer. Later that day, the Aon Partner sent back a revised 

version of the letter which included the same paragraph, but also added two sentences to the end of 

that paragraph in response to a comment from PSERS about the adjustments to the 2015 returns 

reported in the Annual Financial Report not being in error: “We note that the originally reported 

returns in 2015 were not in error but were correct based on the NAVs and cashflows available at 

the time. The adjustments were made to reflect revised information.” Aon was at least negligent 

in making that representation because it did not know the reason for the discrepancy between the 

reported returns. 

 

20. On August 31, 2020, the Aon Partner and PSERS staff, including PSERS’s CIO, 

had a conference call to discuss the most recent version of the response letter and “agreed upon 



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numerous updates.” As one of these updates, PSERS staff, based on information provided by Aon, 

revised the relevant paragraph and added a heading to further clarify that the explanations in that 

paragraph specifically applied to the 2015 returns, as follows: 

 

FY 2015 Reporting Adjustment 

Aon has re-reviewed the returns for Fiscal Year 2015 and has verified that the 

revised returns as reported in the March 31, 2020 report are correct based on the 

new revised NAVs received for some private market funds after the fiscal year 

close. A combination of (1) revisions to the market values and cash flows for some 

Private Credit funds [i.e., the 2016 Adjustment] and (2) the opening up of the 

performance books during the third quarter 2019 report to restructure the 

composites to reflect the new Investment Policy Statement division of public and 

private markets [i.e., the 2019 Restructuring] resulted in the re-calculation of prior 

fiscal years. It was the combination of these two changes that led to changes in the 

performance reported by Aon. The originally reported returns in 2015 were based 

on the NAVs and cashflows available at the time. The adjustments reflect revised 

information according to policy. 

 

Representations that the discrepancy in reported performance returns was not due to errors 

appeared in other sections of this draft, including the following, “The use of ‘errors’ is incorrect. 

As shown above, these are adjustments that are made as more data is reported to PSERS. The 

adjustments are not errors in reporting.” These explanations were incorrect as Aon later learned 

that the underlying data errors, not subsequent adjustments to returns, accounted for the 

discrepancy. 

 

21. On September 1, 2020, the Aon Partner approved the final version of the response 

letter to the Treasurer, which included the representations in paragraph 20 above, despite the fact 

that: (1) Aon still did not know what had caused the 2015 reporting discrepancy; and (2) Aon, had, 

in fact, already ruled out the two causes described in the letter. PSERS sent the letter to the 

Treasurer later that day. Notwithstanding the questions raised in the Treasurer’s letter, Aon did not 

check whether original performance data from the custodian bank, to which Aon continued to have 

access, matched the data in the PARis system. 

Aon’s Role in Certification of Employee Contribution Rates 

22. In December 2020, Aon reported to PSERS that the Risk Share Return Rate was 

6.38% – just high enough to avoid triggering risk share. On December 3, 2020, the Board held a 

regular meeting to, among other things, review PSERS’s performance returns for risk share. At the 

meeting, a member of the Board asked PSERS’s Chief Financial Officer (“CFO”) whether the Risk 

Share Return Rate calculation was made using the values in the Annual Financial Report. The 

CFO responded that he had not run the calculation using those values, but offered to do so. 

 

23. After this question was posed, the Aon Partner and PSERS’s CIO exchanged emails 

during the meeting about what the Risk Share Return Rate would be if they used the Annual 

Financial Report values. Both concluded that, using those values, the Risk Share Return Rate 

would be 6.34%. This figure was below the 6.36% statutory hurdle rate, and would have triggered 



8  

the risk share provision and required teachers to make increased contributions. Despite the 

importance of this question to PSERS, the Aon Partner did not initiate further investigation into the 

cause of the discrepancy in reported returns and assured PSERS that the 6.38% result was correct, 

writing to the CIO: 

 

As you know we are very confident that the adjusted returns are accurate reflecting 

the revised information that we received on the valuation and therefore we are very 

confident that the 6.38% reported nine-year return is an accurate representation of 

PSERS’ investment returns during the period. 

24. Notwithstanding the question posed at the Board meeting, Aon did not check 

whether the source data from the custodian bank matched the data in the PARis system. The 

Board then certified employee contribution rates based on Aon’s representations to PSERS 

concerning the accuracy of the investment returns. 

Aon Identified Reporting Errors, But Did Not 

Fully Investigate and Disclose the Impact of the Errors 

25. Beginning on the day after the Board’s certification, Aon began to realize that there 

were errors that caused the 2015 discrepancy in performance returns. On December 4, 2020, the 

day after the certification, during a routine review of an Aon draft financial report for third quarter 

2020, PSERS staff noticed that Aon’s calendar year 2015 performance figures for a certain 

portfolio composite (the “Absolute Return”)3 did not match figures that another PSERS consultant 

was reporting for the same year. On the same day, PSERS asked Aon to investigate the 

discrepancy. 

 

26. On December 9, 2020, PSERS staff asked Aon Employee A whether the 

discrepancy in the 2015 calendar year return noticed on December 4, 2020 would have any impact 

on the Total Fund return, which would then impact the Risk Share Return Rate. (The “Total Fund” 

return referred to the retirement fund’s overall investment return.) Aon Employee A did not 

immediately respond. At or around this time, despite having previously received repeated inquiries 

from PSERS staff about the discrepancies in the performance returns for 2015, Aon first began the 

process of investigating whether the NAVs and cash flows in the source data from the custodian 

bank matched the data in the PARis performance system used by Aon. 

 

27. On December 10, 2020, another Aon staff member emailed a representative of the 

software company which owned the PARis system, “We think one of the [Aon] analysts 

accidentally wiped accounting data from PSERS for April 2015 and need to figure out how to 

restore/fix.” Aon did not report this inquiry to PSERS at the time. 
 

 

 

 

3 A composite is an aggregation of one or more portfolios managed according to a similar investment mandate, 

objective or strategy. PSERS has a large number of composite returns that rolled up into the Total Fund return, one 

of which was for hedge funds and called the Absolute Return Composite. 



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28. On January 7, 2021, Aon Employee A sent an updated draft of the Aon financial 

report for third quarter 2020 to PSERS. The transmittal of the draft did not address the question of 

whether the Total Fund return was impacted. 

 

29. On January 8, 2021, PSERS staff approved the draft report and requested that Aon 

deliver the final version of the quarterly report. On January 12, 2021, an Aon employee explained 

that Aon would provide the final quarterly report, but that the Aon Partner wanted to talk to 

PSERS’s CIO before the final version was sent to PSERS. 

 

30. On January 13, 2021, the Aon Partner called PSERS’s CIO to tell him that there 

was an issue that had impacted a number of historical composite returns. The CIO asked the Aon 

Partner whether the error affected the Total Fund performance, which would require recalculation 

of the Risk Share Return Rate. According to the CIO, the Aon Partner assured the CIO that the 

issue would not affect the risk share calculation and was at the composite level. The PSERS CIO 

requested that the Aon Partner prepare a memorandum to explain Aon’s finding. 

 

31. On February 17, 2021, the Aon Partner called PSERS’s CIO to inform him for the 

first time that the error had impacted PSERS’s Total Fund performance calculation, and that 

therefore the Risk Share Return Rate had to be recalculated. Later that day, the Aon Partner hosted 

a larger group call, during which the Aon Partner told PSERS that the error related to the quarter 

ended June 30, 2015, and reiterated that it impacted the Total Fund return. 

 

32. On March 5, 2021, the Aon Partner, at PSERS’s request, provided a memo 

explaining the errors. In the memo, Aon concluded that the correct Risk Share Return Rate was 

6.34%, falling below the 6.36% statutory risk share hurdle rate. In the memo, the Aon Partner 

made a number of representations about the error and was at least negligent in making those 

representations because, at that point, Aon still did not know the causes of the error. For example, 

the Aon Partner attributed the error to “data corruption” that “was due to an error by an analyst in 

uploading NAV and cashflow data from the [custodian bank] system into the PARis performance 

system Aon uses.” This statement was misleading because it was still not clear to Aon what had 

caused the error and it was merely a working theory. The Aon Partner also represented that the 

data corruption had “impacted a few asset class composites in the public markets.” This statement 

was misleading because it understated the extent of the impact of the issue when, at that time, Aon 

did not know the scope of the error’s impact. In fact, many, if not most, of the accounts sourced 

from the custodian bank were impacted by systemic erroneous revisions that were made in the 

PARis system in May 2016 (and not fully understood until late 2022). 

 

33. On April 16, 2021, Aon sent an update letter to PSERS’s CIO. Although the Aon 

Partner had given PSERS the impression that Aon had identified and determined the exact cause of 

the error, the update letter referred to Aon’s “continued review” and indicated that “Aon fully 

understands that its responsibility to report to PSERS is ongoing and will supplement the 

information related here when and to the extent appropriate and, of course, as may be responsive to 

any questions PSERS may have.” The letter further explained that “all indications are that the 

issues here reflect inadvertent clerical mistakes at a data-entry level.” The letter concluded that 



10  

“Aon is determined to ascertain all pertinent details surrounding the issues here and will provide it 

as our comprehensive review continues.” 

 

34. On April 19, 2021, the Board voted to recertify the employee contribution rates 

originally approved by the Board on December 3, 2020, based on the corrected Risk Share Return 

Rate of 6.34%. The recertification required additional contributions from certain public school 

employees beginning in July 2021. 

Violations 

35. As a result of the conduct described above, Aon willfully4 violated Section 206(2) 

of the Advisers Act, which prohibits an investment adviser from engaging “in any transaction, 

practice or course of business which operates as a fraud or deceit upon any client or prospective 

client.” Scienter is not required to establish a violation of Section 206(2), but rather a violation 

may rest on a finding of negligence. SEC v. Steadman, 967 F.2d 636, 643 n.5 (D.C. Cir. 1992) 

(citing SEC v. Capital Gains Research Bureau, Inc., 375 U.S. 180, 194-195 (1963)). 

Disgorgement 

 

36. The disgorgement and prejudgment interest ordered in Section IV, paragraph C is 

consistent with equitable principles and does not exceed Respondent’s net profits from its 

violations, and will be distributed to harmed investors to the extent feasible. The Commission will 

hold funds paid pursuant to Section IV, paragraph C in an account at the United States Treasury 

pending distribution. Upon approval of the distribution final accounting by the Commission, any 

amounts remaining that are infeasible to return to investors, and any amounts returned to the 

Commission in the future that are infeasible to return to investors, may be transferred to the general 

fund of the U.S. Treasury, subject to Section 21F(g)(3) of the Exchange Act. 

Remedial Efforts 

 

37. In determining to accept the Offer, the Commission considered remedial acts 

promptly undertaken by Aon and cooperation afforded the Commission staff. 

IV. 

In view of the foregoing, the Commission deems it appropriate and in the public interest to 

impose the sanctions agreed to in Respondent’s Offer. 

Accordingly, pursuant to Sections 203(e) and 203(k) of the Advisers Act, it is hereby 

ORDERED that: 
 

 

4 “Willfully,” for purposes of imposing relief under Section 203(e) of the Advisers Act, “‘means no more than that the 

person charged with the duty knows what he is doing.’” Wonsover v. SEC, 205 F.3d 408, 414 (D.C. Cir. 2000) 

(quoting Hughes v. SEC, 174 F.2d 969, 977 (D.C. Cir. 1949)). There is no requirement that the actor “also be aware 

that he is violating one of the Rules or Acts.” Tager v. SEC, 344 F.2d 5, 8 (2d Cir. 1965). 



11  

A. Respondent cease and desist from committing or causing any violations and any 

future violations of Section 206(2) of the Advisers Act. 

 

B. Respondent is censured. 

 

C. Respondent shall, within 10 days of the entry of this Order, pay a civil money 

penalty in the amount of $1,000,000, disgorgement of $495,098.50 and prejudgment interest of 

$47,089.29 to the Securities and Exchange Commission. If timely payment of disgorgement or 

prejudgment interest is not made, additional interest shall accrue pursuant to SEC Rule of Practice 

600. If timely payment of the civil penalty is not made, additional interest shall accrue pursuant to 

31 U.S.C. §3717. 

 

Payment must be made in one of the following ways: 

 

(1) Respondent may transmit payment electronically to the Commission, which 

will provide detailed ACH transfer/Fedwire instructions upon request; 

 

(2) Respondent may make direct payment from a bank account via Pay.gov 

through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or 

 

(3) Respondent may pay by certified check, bank cashier’s check, or United 

States postal money order, made payable to the Securities and Exchange 

Commission and hand-delivered or mailed to: 

 

Enterprise Services Center 

Accounts Receivable Branch 

HQ Bldg., Room 181, AMZ-341 

6500 South MacArthur Boulevard 

Oklahoma City, OK 73169 

 

Payments by check or money order must be accompanied by a cover letter identifying Aon as the 

Respondent in these proceedings and the file number of these proceedings; a copy of the cover 

letter and check or money order must be sent to Assistant Director Kevin B. Currid, Division of 

Enforcement, Securities and Exchange Commission, 33 Arch Street, Boston, MA 02110. 

 

D. Pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, a Fair Fund is created 

for the disgorgement, prejudgment interest and penalties referenced in paragraph IV, Section C 

above. This Fair Fund may be combined with any fund established for the benefit of harmed 

investors in In the Matter of Claire P. Shaughnessy, Admin. Proc. No. 3-21836, Advisers Act of 

1940, Rel. No. 6535 (Jan. 25, 2024). Amounts ordered to be paid as civil money penalties 

pursuant to this Order shall be treated as penalties paid to the government for all purposes, 

including all tax purposes. To preserve the deterrent effect of the civil penalty, Respondent agrees 

that in any Related Investor Action, it shall not argue that it is entitled to, nor shall it benefit by, 

offset or reduction of any award of compensatory damages by the amount of any part of 

Respondent’s payment of a civil penalty in this action (“Penalty Offset”). If the court in any 

Related Investor Action grants such a Penalty Offset, Respondent agrees that it shall, within 30 

http://www.sec.gov/about/offices/ofm.htm%3B


12  

days after entry of a final order granting the Penalty Offset, notify the Commission’s counsel in 

this action and pay the amount of the Penalty Offset to the Securities and Exchange Commission. 

Such a payment shall not be deemed an additional civil penalty and shall not be deemed to change the 

amount of the civil penalty imposed in this proceeding. For purposes of this paragraph, a “Related Investor 

Action” means a private damages action brought against Respondent by or on behalf of one or more 

investors based on substantially the same facts as alleged in the Order instituted by the Commission in this 

proceeding. 

 

By the Commission. 

 

 

 

Vanessa A. Countryman 

Secretary