UNITED STATES OF AMERICA

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

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

In the Matter of

Claire P. Shaughnessy,

Respondent.

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:

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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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

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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

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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 nineyear 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.”

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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.

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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

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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

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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.

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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).

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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.

“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).

4

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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

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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

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