In re Claire P. Shaughnessy

 UNITED STATES OF AMERICA 
 Before the 
 SECURITIES AND EXCHANGE COMMISSION 
 
 
INVESTMENT ADVISERS ACT OF 1940 
Release No. 6535 / January 25, 2024 
 
ADMINISTRATIVE PROCEEDING 
File No. 3-21836  
 
 
In the Matter of 
 
Claire P. Shaughnessy, 
 
Respondent. 
 
ORDER INSTITUTING ADMINISTRATIVE 
AND CEASE-AND-DESIST PROCEEDINGS, 
PURSUANT TO SECTIONS 203(f) 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(f) and 203(k) of the Investment Advisers Act of 1940 
(“Advisers Act”) against Claire P. Shaughnessy (“Shaughnessy” 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 her and the subject matter of these 
proceedings, which are admitted, and except as provided herein in Section V., Respondent 
consents to the entry of this Order Instituting Administrative and Cease-and-Desist Proceedings 
Pursuant to Sections 203(f) 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. 
 
III. 
 On the basis of this Order and Respondent’s Offer, the Commission finds
1
 that: 
  
 
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. 

 2 
 
Summary 
 
 This matter involves conduct by Shaughnessy that was inconsistent with her duty to her 
client, the Pennsylvania Public School Employees’ Retirement System (“PSERS”), under the 
Advisers Act.  Shaughnessy was a partner and investment adviser representative associated with 
Aon Investments USA Inc., fka Aon Hewitt Investment Consulting, Inc. (“Aon”) from 
approximately July 2012 to December 2022.  From 2013 through 2023, 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.  From 2013 until December 2022, 
Shaughnessy was the lead partner on Aon’s engagement with PSERS.  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.  As lead partner, Shaughnessy provided investment advisory services to PSERS and 
was in charge of Aon’s calculation of PSERS’s investment performance and the risk share return 
rate calculation.    
 
PSER’s 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, 
Shaughnessy failed to adequately investigate the discrepancy.  Shaughnessy 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.  Shaughnessy also 
provided PSERS with two other reasons for the 37 basis point discrepancy that had already been 
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.  By February 2021, Shaughnessy realized that those errors impacted 
PSERS’s overall return and required the recalculation of the Risk Share Return Rate.  In March 
2021, Shaughnessy 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 

 3 
pension contributions.  Even after the error was discovered, Shaughnessy made misstatements and 
omitted facts in communications with PSERS about the extent to which she understood the nature 
and impact of the errors.    
 
Shaughnessy acted inconsistent with her 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 she understood those causes.  As a result of the conduct 
described herein, Shaughnessy violated Section 206(2) of the Advisers Act.   
 
Respondent 
 
1. Shaughnessy age 56, lives in Darien, Connecticut.  She was a partner and 
investment adviser representative associated with Aon from approximately July 2012 to 
December 2022.  Shaughnessy has been a chartered financial analyst since October 15, 2003 and 
previously held Series 7 and Series 63 licenses.    
 
Other Relevant Entities 
 
2. 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. 
 
3. 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 
 
4. 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 

 4 
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. 
 
5. In 2013, Aon was engaged as an investment adviser and to provide general 
investment consultant services to PSERS. In her role as the lead partner on the PSERS engagement 
during the relevant time period Shaughnessy was responsible for providing investment advisory 
services to PSERS, including advising on asset allocation and the engagement and retention of 
investment managers in certain asset classes, and providing various performance measurement, 
risk and attribution services. As part of the performance measurement services, Shaughnessy was 
also responsible for the calculation of PSERS’s investment returns for purposes of risk share. 
During the relevant time period, another Aon employee (“Aon Employee A”) was also assigned to 
the PSERS engagement and reported directly to Shaughnessy.  
 
6. 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. 
 
Shaughnessy and Aon Did Not Adequately Investigate  
PSERS’s Concerns About Discrepancies Between Historical  
Returns and Returns Used To Calculate the Risk Share Return Rate 
 
7. In March 2020, PSERS staff began internally discussing the calculation of the Risk 
Share Return Rate for the period ended June 30, 2020. 
 
8. 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.”   
 
9. 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.”   
 

 5 
10. 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).  
 
11. 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?”  
12. 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 
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.  During this period, Aon Employee A was directly supervised by 
Shaughnessy.  
 
Shaughnessy Made Material Misstatements and Omissions  
to PSERS About the Reasons for the Reporting Discrepancies 
 
13. 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.)   
 
14. Later that day, PSERS’s Chief Investment Officer (“CIO”) forwarded the 
Treasurer’s letter to Shaughnessy.  Shaughnessy 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.”   
 
 
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 
15. On the morning of August 17, 2020, Aon Employee A emailed Shaughnessy 
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, Shaughnessy and Aon Employee A 
knew or should have known those events were not the reasons for the 37 basis point discrepancy in 
the reported performance returns for fiscal year 2015. 
 
16. 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.”  
Shaughnessy 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 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.”  Shaughnessy does not appear to have 
responded to the email. 
 
17. Between August 25, 2020 and September 1, 2020, PSERS and Shaughnessy 
exchanged drafts of responses to the Treasurer’s letter, with Shaughnessy 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.   
 
18. On August 25, 2020, Shaughnessy 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. 
 
Shaughnessy knew or should have known this was inaccurate. 
 
19. On August 26, 2020, Shaughnessy 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.”  
 
20. Shaughnessy 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 Shaughnessy 
another draft of the response letter to the Treasurer.  Later that day, Shaughnessy sent back a 
revised version of the letter which included the same paragraph, but also added two sentences to 

 7 
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.”  Shaughnessy 
was at least negligent in making that representation because she did not know the reason for the 
discrepancy between the reported returns.  
 
21. On August 31, 2020, Shaughnessy and PSERS staff, including PSERS’s CIO, had a 
conference call to discuss the most recent version of the response letter and “agreed upon 
numerous updates.”  As one of these updates, PSERS staff, based on information provided by 
Shaughnessy, 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. 
 
22. On September 1, 2020, Shaughnessy approved the final version of the response 
letter to the Treasurer, which included the representations in paragraph 21 above, despite the fact 
that: (1) Aon still did not know what had caused the 2015 reporting discrepancy; and (2) Aon knew 
or should have known  the two causes described in the letter were not the reasons for the 
discrepancy.  PSERS sent the letter to the Treasurer later that day.  Notwithstanding the questions 
raised in the Treasurer’s letter, Shaughnessy did not check, or ask Employee A to check, whether 
original performance data from the custodian bank, to which Aon continued to have access, 
matched the data in the PARis system. 
Shaughnessy’s Role in Certification of Employee Contribution Rates 

 8 
23. 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.   
 
24. After this question was posed, Shaughnessy 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 
the risk share provision and required teachers to make increased contributions.  Despite the 
importance of this question to PSERS, Shaughnessy 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. 
25. Notwithstanding the question posed at the Board meeting, Shaughnessy did not 
check, and did not ask Aon Employee A to check, whether the source data from the custodian bank 
matched the data in the PARis system.   
Shaughnessy Identified Reporting Errors, But Did Not  
Fully Investigate and Disclose the Impact of the Errors 
26. Beginning on the day after the Board’s certification, Aon staff 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 staff to investigate the 
discrepancy.  
 
27. 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 staff first 
 
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 
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. 
 
28. 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.”  Neither Shaughnessy nor any other Aon staff reported this inquiry to PSERS at the 
time. 
 
29. 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.   
 
30. 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 Shaughnessy wanted to talk to PSERS’s 
CIO before the final version was sent to PSERS. 
 
31. On January 13, 2021, Shaughnessy called PSERS’s CIO to tell him that there was 
an issue that had impacted a number of historical composite returns.  The CIO asked Shaughnessy 
whether the error affected the Total Fund performance, which would require recalculation of the 
Risk Share Return Rate.  According to the CIO, Shaughnessy assured the CIO that the issue would 
not affect the risk share calculation and was at the composite level.  The PSERS CIO requested that 
Shaughnessy prepare a memorandum to explain Aon’s finding.   
 
32. On February 17, 2021, Shaughnessy 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, Shaughnessy hosted a larger 
group call, during which she told PSERS that the error related to the quarter ended June 30, 2015, 
and reiterated that it impacted the Total Fund return.  
 
33. On March 5, 2021, Shaughnessy, at PSERS’s request, provided a memo explaining 
the errors.  In the memo, Shaughnessy concluded that the correct Risk Share Return Rate was 
6.34%, falling below the 6.36% statutory risk share hurdle rate.  In the memo, Shaughnessy made a 
number of representations about the error and was at least negligent in making those 
representations because, at that point, she still did not know the causes of the error.  For example, 
Shaughnessy 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 her or anyone at 
Aon what had caused the error and it was merely a working theory.  Shaughnessy 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, no one at Aon knew 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). 

 10 
 
34. On April 16, 2021, Aon sent an update letter to PSERS’s CIO.  Although 
Shaughnessy 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 
“Aon is determined to ascertain all pertinent details surrounding the issues here and will provide it 
as our comprehensive review continues.”     
 
35. 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 
36. As a result of the conduct described above, Shaughnessy 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)).  
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(f) and 203(k) of the Advisers Act, it is hereby 
ORDERED that: 
 
 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 $30,000 to the Securities and Exchange Commission.  If timely payment 
of the civil penalty is not made, additional interest shall accrue pursuant to 31 U.S.C. §3717.     
 
4
 “Willfully,” for purposes of imposing relief under Section 203(f) 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 
 
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 
Shaughnessy 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 penalties referenced in Section IV, Paragraph C above. This fund may be combined with any 
other distribution fund or fair fund arising out of the same facts that are the subject of this Order.  
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, she 
shall not argue that she is entitled to, nor shall she 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 she shall, within 30 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  
  

 12 
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. 
 
V. 
 
 It is further Ordered that, solely for purposes of exceptions to discharge set forth in Section 
523 of the Bankruptcy Code, 11 U.S.C. §523, the findings in this Order are true and admitted by 
Respondent, and further, any debt for disgorgement, prejudgment interest, civil penalty or other 
amounts due by Respondent under this Order or any other judgment, order, consent order, decree 
or settlement agreement entered in connection with this proceeding, is a debt for the violation by 
Respondent of the federal securities laws or any regulation or order issued under such laws, as set 
forth in Section 523(a)(19) of the Bankruptcy Code, 11 U.S.C. §523(a)(19). 
 
 By the Commission. 
 
 
 
 Vanessa A. Countryman 
        Secretary 

UNITED STATES OF AMERICA 

 Before the 

 SECURITIES AND EXCHANGE COMMISSION 

 

 

INVESTMENT ADVISERS ACT OF 1940 

Release No. 6535 / January 25, 2024 

 

ADMINISTRATIVE PROCEEDING 

File No. 3-21836  

 

 

In the Matter of 

 

Claire P. Shaughnessy, 

 

Respondent. 

 

ORDER INSTITUTING ADMINISTRATIVE 

AND CEASE-AND-DESIST PROCEEDINGS, 

PURSUANT TO SECTIONS 203(f) 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(f) and 203(k) of the Investment Advisers Act of 1940 

(“Advisers Act”) against Claire P. Shaughnessy (“Shaughnessy” 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 her and the subject matter of these 

proceedings, which are admitted, and except as provided herein in Section V., Respondent 

consents to the entry of this Order Instituting Administrative and Cease-and-Desist Proceedings 

Pursuant to Sections 203(f) 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. 

 

III. 

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

  

 
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. 



 2 

 

Summary 

 

 This matter involves conduct by Shaughnessy that was inconsistent with her duty to her 

client, the Pennsylvania Public School Employees’ Retirement System (“PSERS”), under the 

Advisers Act.  Shaughnessy was a partner and investment adviser representative associated with 

Aon Investments USA Inc., fka Aon Hewitt Investment Consulting, Inc. (“Aon”) from 

approximately July 2012 to December 2022.  From 2013 through 2023, 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.  From 2013 until December 2022, 

Shaughnessy was the lead partner on Aon’s engagement with PSERS.  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.  As lead partner, Shaughnessy provided investment advisory services to PSERS and 

was in charge of Aon’s calculation of PSERS’s investment performance and the risk share return 

rate calculation.    

 

PSER’s 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, 

Shaughnessy failed to adequately investigate the discrepancy.  Shaughnessy 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.  Shaughnessy also 

provided PSERS with two other reasons for the 37 basis point discrepancy that had already been 

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.  By February 2021, Shaughnessy realized that those errors impacted 

PSERS’s overall return and required the recalculation of the Risk Share Return Rate.  In March 

2021, Shaughnessy 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 



 3 

pension contributions.  Even after the error was discovered, Shaughnessy made misstatements and 

omitted facts in communications with PSERS about the extent to which she understood the nature 

and impact of the errors.    

 

Shaughnessy acted inconsistent with her 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 she understood those causes.  As a result of the conduct 

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

 

Respondent 

 

1. Shaughnessy age 56, lives in Darien, Connecticut.  She was a partner and 

investment adviser representative associated with Aon from approximately July 2012 to 

December 2022.  Shaughnessy has been a chartered financial analyst since October 15, 2003 and 

previously held Series 7 and Series 63 licenses.    

 

Other Relevant Entities 

 

2. 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. 

 

3. 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 

 

4. 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 



 4 

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. 

 

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

investment consultant services to PSERS. In her role as the lead partner on the PSERS engagement 

during the relevant time period Shaughnessy was responsible for providing investment advisory 

services to PSERS, including advising on asset allocation and the engagement and retention of 

investment managers in certain asset classes, and providing various performance measurement, 

risk and attribution services. As part of the performance measurement services, Shaughnessy was 

also responsible for the calculation of PSERS’s investment returns for purposes of risk share. 

During the relevant time period, another Aon employee (“Aon Employee A”) was also assigned to 

the PSERS engagement and reported directly to Shaughnessy.  

 

6. 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. 

 

Shaughnessy and Aon Did Not Adequately Investigate  

PSERS’s Concerns About Discrepancies Between Historical  

Returns and Returns Used To Calculate the Risk Share Return Rate 

 

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

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

 

8. 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.”   

 

9. 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.”   

 



 5 

10. 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).  

 

11. 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?”  

12. 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 

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.  During this period, Aon Employee A was directly supervised by 

Shaughnessy.  

 

Shaughnessy Made Material Misstatements and Omissions  

to PSERS About the Reasons for the Reporting Discrepancies 

 

13. 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.)   

 

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

Treasurer’s letter to Shaughnessy.  Shaughnessy 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.”   

 

 
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 

15. On the morning of August 17, 2020, Aon Employee A emailed Shaughnessy 

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, Shaughnessy and Aon Employee A 

knew or should have known those events were not the reasons for the 37 basis point discrepancy in 

the reported performance returns for fiscal year 2015. 

 

16. 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.”  

Shaughnessy 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 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.”  Shaughnessy does not appear to have 

responded to the email. 

 

17. Between August 25, 2020 and September 1, 2020, PSERS and Shaughnessy 

exchanged drafts of responses to the Treasurer’s letter, with Shaughnessy 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.   

 

18. On August 25, 2020, Shaughnessy 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. 

 

Shaughnessy knew or should have known this was inaccurate. 

 

19. On August 26, 2020, Shaughnessy 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.”  

 

20. Shaughnessy 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 Shaughnessy 

another draft of the response letter to the Treasurer.  Later that day, Shaughnessy sent back a 

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



 7 

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.”  Shaughnessy 

was at least negligent in making that representation because she did not know the reason for the 

discrepancy between the reported returns.  

 

21. On August 31, 2020, Shaughnessy and PSERS staff, including PSERS’s CIO, had a 

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

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

Shaughnessy, 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. 

 

22. On September 1, 2020, Shaughnessy approved the final version of the response 

letter to the Treasurer, which included the representations in paragraph 21 above, despite the fact 

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

or should have known  the two causes described in the letter were not the reasons for the 

discrepancy.  PSERS sent the letter to the Treasurer later that day.  Notwithstanding the questions 

raised in the Treasurer’s letter, Shaughnessy did not check, or ask Employee A to check, whether 

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

matched the data in the PARis system. 

Shaughnessy’s Role in Certification of Employee Contribution Rates 



 8 

23. 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.   

 

24. After this question was posed, Shaughnessy 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 

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

importance of this question to PSERS, Shaughnessy 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. 

25. Notwithstanding the question posed at the Board meeting, Shaughnessy did not 

check, and did not ask Aon Employee A to check, whether the source data from the custodian bank 

matched the data in the PARis system.   

Shaughnessy Identified Reporting Errors, But Did Not  

Fully Investigate and Disclose the Impact of the Errors 

26. Beginning on the day after the Board’s certification, Aon staff 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 staff to investigate the 

discrepancy.  

 

27. 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 staff first 

 
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 

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. 

 

28. 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.”  Neither Shaughnessy nor any other Aon staff reported this inquiry to PSERS at the 

time. 

 

29. 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.   

 

30. 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 Shaughnessy wanted to talk to PSERS’s 

CIO before the final version was sent to PSERS. 

 

31. On January 13, 2021, Shaughnessy called PSERS’s CIO to tell him that there was 

an issue that had impacted a number of historical composite returns.  The CIO asked Shaughnessy 

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

Risk Share Return Rate.  According to the CIO, Shaughnessy assured the CIO that the issue would 

not affect the risk share calculation and was at the composite level.  The PSERS CIO requested that 

Shaughnessy prepare a memorandum to explain Aon’s finding.   

 

32. On February 17, 2021, Shaughnessy 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, Shaughnessy hosted a larger 

group call, during which she told PSERS that the error related to the quarter ended June 30, 2015, 

and reiterated that it impacted the Total Fund return.  

 

33. On March 5, 2021, Shaughnessy, at PSERS’s request, provided a memo explaining 

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

6.34%, falling below the 6.36% statutory risk share hurdle rate.  In the memo, Shaughnessy made a 

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

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

Shaughnessy 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 her or anyone at 

Aon what had caused the error and it was merely a working theory.  Shaughnessy 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, no one at Aon knew 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). 



 10 

 

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

Shaughnessy 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 

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

as our comprehensive review continues.”     

 

35. 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 

36. As a result of the conduct described above, Shaughnessy 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)).  

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(f) and 203(k) of the Advisers Act, it is hereby 

ORDERED that: 

 

 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 $30,000 to the Securities and Exchange Commission.  If timely payment 

of the civil penalty is not made, additional interest shall accrue pursuant to 31 U.S.C. §3717.     

 
4 “Willfully,” for purposes of imposing relief under Section 203(f) 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 

 

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 

Shaughnessy 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 penalties referenced in Section IV, Paragraph C above. This fund may be combined with any 

other distribution fund or fair fund arising out of the same facts that are the subject of this Order.  

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, she 

shall not argue that she is entitled to, nor shall she 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 she shall, within 30 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  

  

http://www.sec.gov/about/offices/ofm.htm


 12 

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. 

 

V. 

 

 It is further Ordered that, solely for purposes of exceptions to discharge set forth in Section 

523 of the Bankruptcy Code, 11 U.S.C. §523, the findings in this Order are true and admitted by 

Respondent, and further, any debt for disgorgement, prejudgment interest, civil penalty or other 

amounts due by Respondent under this Order or any other judgment, order, consent order, decree 

or settlement agreement entered in connection with this proceeding, is a debt for the violation by 

Respondent of the federal securities laws or any regulation or order issued under such laws, as set 

forth in Section 523(a)(19) of the Bankruptcy Code, 11 U.S.C. §523(a)(19). 

 

 By the Commission. 

 

 

 

 Vanessa A. Countryman 

        Secretary