Tuesday, December 28, 2021

No. 450: The South Carolina Department of Insurance Attacks the SHIP Rehabilitation Plan

On November 16, 2021, the South Carolina Department of Insurance (SCDOI) issued a media release entitled "SCDOI Director Ray Farmer Seeks to Stop the Implementation of the Rehabilitation Plan for Senior Health Insurance Company of Pennsylvania (SHIP) in South Carolina." The first sentence of the media release reads: "Yesterday, Ray Farmer, Director of the SCDOI, took another step toward protecting consumers who have long-term care insurance with SHIP from potentially detrimental rate increases or benefit reductions."

On November 19, Chief Administrative Judge L. Casey Manning of the Fifth Judicial Circuit in Columbia, South Carolina, blocked immediate implementation of the SHIP Rehabilitation Plan. At this writing, the fate of the SHIP Rehabilitation Plan is not known.

I have written extensively about SHIP's financial problems. To review my posts about SHIP, click here or search for SHIP on my blog using the search box in the extreme upper left corner.


Tuesday, December 14, 2021

No. 449: The AM Best Business Trilogy

On August 21, 2020, A. M. Best Company published The AM Best Business Trilogy. The company sent me a review copy consisting of three hardback books.

One book, entitled The Man, is a 275-page (including end notes and index) biography of Alfred M. Best. Another book, entitled The Company, is a 581-page (including end notes and index) history of A. M. Best Company. The third book, entitled The Industry, is an 815-page (including end notes and index) history of the credit rating agencies.

The Trilogy is an impressive piece of work. It is available for $75 from A. M. Best Company or from Amazon.


Wednesday, December 8, 2021

No. 448: A Class Action Lawsuit Against Governor Jay Inslee of Washington State and Others

In 2019, Governor Jay Inslee of Washington State signed into law a state program designed to address the problem of financing the long-term care exposure faced by residents of the state. The statute created a "long term service and support trust fund" referred to as "WA Care," and at the beginning of next year workers will be required to start contributing to the fund. WA Care is the nation's first state-operated long-term care insurance program.

On November 9, 2021, three entities and six individuals filed in federal court in Seattle a class action lawsuit against Governor Inslee and three others. (See Pacific Bells, LLC et al. v. Jay Inslee et al., U.S. District Court, Western District of Washington, Case No. 2:21-cv-1515.) Here is the first paragraph of the introduction in the 21-page complaint:
Beginning January 1, 2022, Washington State workers will pay $0.58 per $100 (.58%) of earnings to the Long-Term Service and Support Trust Fund (the "Trust") pursuant to the Long Term Services and Support Trust Program, referred to as "WA Care" or the "Act" and codified as RCW 50B.04, et seq. This action challenges the Act and requests a declaratory judgment that the Act is unenforceable as it violates ERISA and federal and state laws governing employee benefit plans and multiple employer welfare arrangements ("MEWAs").
The Judge
The case has been assigned to Senior Judge Thomas S. Zilly. President Reagan nominated him in February 1988 and the Senate confirmed him in April 1988. He assumed senior status in January 2004.

General Observations
This interesting case is in its early stages. I plan to provide an update in due course.


Tuesday, November 23, 2021

No. 447: A Class Action Relating to an Alleged Pyramid Scheme

On June 25, 2018, two individuals filed, in federal court in California, a class action lawsuit against a suspended California corporation, five individuals, a Texas corporation, and a California limited liability company. (See In Re Premium Financial Alliance, Inc. Insurance Marketing Litigation, U.S. District Court, Northern District of California, Oakland Division, Case No. 4:18-cv-3771.)

The Original Complaint
The plaintiffs alleged in the 29-page original complaint that they had been victimized by a "classic pyramid scheme." The first paragraph of the "Introduction to the Case" section of the original complaint reads:
The Defendants are operating a classic pyramid scheme. What makes this scam particularly egregious is that the Defendants have never marketed or sold insurance policies to any retail customers, but instead derive 100% of the scheme's revenue from chain recruitment. These practices have been prohibited by the Federal Trade Commission, and violate State and Federal Laws. Plaintiffs and tens of thousands have joined PFA and have become "Associates." Plaintiffs did not make money as promised. The Associates failed because they were doomed from the start by a PFA marketing plan that systematically rewards recruiting Associates over the sale of overpriced insurance product or service to retail customers.
The original complaint does not describe the targets of the pyramid scheme. Other case documents, however, indicate that the program was aimed at Chinese, Vietnamese, and other immigrants who may have limited fluency in the English language.

Subsequent Developments
Subsequent to the filing of the original complaint, there have been amended complaints, answers to the complaints, and unsuccessful motions to dismiss. On May 14, 2021, the plaintiffs filed a motion for class certification.

General Observations
This is an interesting case. Because I am not an attorney, it would be inappropriate for me to express a legal opinion on it. The case has a long way to go, and I plan to provide an update fairly soon.


Wednesday, November 17, 2021

No. 446: The Bounty Trilogy

Recently I completed some pleasurable reading. I decided to prepare this blog post in case some of you might want to do the same.

The Bounty was a small English warship that in 1787 set out on a very long voyage to Tahiti to pick up breadfruit trees, which would provide a source of inexpensive food for slaves in the West Indies. Lieutenant William Bligh captained the Bounty. Fletcher Christian was the Master's Mate on the Bounty and the leader of the mutineers.

Charles Nordhoff and James Norman Hall wrote a trilogy of historical novels describing the voyage. The titles of the three books, all published in the early 1930s, are Mutiny on the Bounty, Men Against the Sea, and Pitcairn's Island. The first book is about the mutiny and its immediate aftermath. Instead of killing Bligh, the mutineers put him and 18 others in a small open boat, called a "launch," with food and supplies, and set them adrift. The second book is about Bligh's incredibly long and successful voyage in the launch, after which he returned to England. The third book is about a remote island where Christian and some of the mutineers settled permanently and destroyed the Bounty.

I read the trilogy about 70 years ago. Recently, on a whim, I decided to reread Mutiny on the Bounty. In addition to describing the mutiny, it also discusses what happened in the first several years after the mutiny, and, in an epilogue, what happened many years after the mutiny.

Several movies have been made about the Bounty. My favorite is the 1935 black-and-white film starring Clark Gable as Fletcher Christian and Charles Laughton as William Bligh. The narrator was Englishman Roger Byam, who was played in the film by actor Franchot Tone.


Wednesday, November 10, 2021

No. 445: Kemper's Long Legal Struggle Relating to Lost Policyholders: An Update

In No. 424 (June 10, 2021), I wrote about Kemper's long legal struggle relating to lost policyholders. The struggle is now in the Florida Supreme Court. Here I provide an update on the case. (See United Insurance Company of America v. Patronis, Florida Supreme Court, Case No. SC20-1306.)

On October 12, 2021, the Florida Supreme Court issued an order setting oral argument at 9:00 a.m. on December 8, 2021. Each side is given a maximum of 20 minutes. No continuances will be granted except upon a showing of extreme hardship. I plan to provide a further update when I consider it warranted.


Thursday, November 4, 2021

No. 444: Adam Schiff's Important Book

Adam Schiff's important book was published on October 12, 2021. It is entitled Midnight in Washington: How We Almost Lost Our Democracy and Still Could.

Schiff represents California's 28th congressional district. As chair of the House Permanent Select Committee on Intelligence, he was heavily involved in both impeachments of Donald Trump. Schiff's book presents a tremendous amount of detail about Trump's attack on our democracy. Here is what presidential historian Michael Beschloss says about Schiff's book: "In this thoughtful, absorbing and revelatory memoir, an important champion and defender of American democracy shows us how he became a national leader and, drawing on his experience on the inside, how close the Trump regime brought us to losing our system." Here is the final paragraph in the epilogue of Schiff's book:
Seventeen years from now, when the present is a distant memory for all but the cicadas, we will look back on this time as a decisive moment for our country, when we were at sea and our destination remained unknown, our future obscure, the great enterprise in self-rule in doubt. Did we turn back toward the shores of our Founders, or was this the moment when the clouds descended, the stars disappeared, and we became irretrievably lost? We must understand that we are not passengers on this journey, unable to steer the country we all love in one direction or another. It is within our power to take hold of the rudder, choose the future we want for our children and grandchildren, and, with the grace of God, make it so.

Friday, October 22, 2021

No. 443: The Secondary Market for Life Insurance Policies

In my 2015 book entitled The Insurance Forum: A Memoir, Chapter 9 is entitled "The Secondary Market for Life Insurance Policies." In that 12-page chapter, I discuss the origin and growth of the secondary market, including viatical settlements, life settlements, and stranger-originated life insurance (STOLI). I refer to STOLI as speculator-initiated life insurance (spinlife).

I have long been concerned about the negative impact of the secondary market (the "unselling" of life insurance) on life insurance companies and their policyholders. Recently I heard reports about life insurance companies and life settlement companies competing vigorously against one another in their efforts to persuade policyholders to cash in or sell their life insurance policies. For that reason, I decided to prepare this blog post to revisit the subject. After you read Chapter 9 of my Memoir, I would welcome your comments.


Friday, October 15, 2021

No. 442: A 25-Year Prison Term for a Securities Fraudster in Texas

The TSSB Press Release
On October 4, 2021, the Texas State Securities Board (TSSB) issued a press release announcing that Mejdi Mahmoud Abousaoui has been sentenced to 25 years in state prison and ordered to pay restitution of about $3 million for engaging in first-degree securities fraud. He was prosecuted in Fort Bend County, Texas.

The Felony Complaint
The charges against Abousaoui were in the form of an eight-page felony complaint. It charged him with engaging in a Ponzi scheme that ran from early 2015 through mid-2018 and involved at least 70 victims. The felony complaint lists the names of the victims and the amounts and dates of their losses. The first paragraph of the felony complaint reads:
Before me, the undersigned Assistant District Attorney of Fort Bend County, Texas, this day appeared the undersigned affiant, who under oath says he has good reason to believe and does believe that in Fort Bend County, Texas, Mejdi Mahmoud Abousaoui, hereafter styled the Defendant, heretofore, on or about and between March 1, 2015, and April 30, 2018, pursuant to one scheme and continuing course of conduct, did, unlawfully, then and there, directly and indirectly, and through his company Abousaoui Financial, LLC, sell and offer for sale investments in the Abousaoui Financial investment program (hereinafter referred to as the Program), being securities, namely: stocks, shares, notes, bonds, investment contracts, and evidences of indebtedness, to each of the persons listed below and in the following amounts:
The felony complaint lists the names of the victims. It also shows the dates and amounts of their losses.

According to the TSSB press release, Abousaoui has already paid more than $200,000 of restitution. He has been ordered to pay the remaining balance of about $2.8 million of restitution.

General Observations
I recommend that you read the felony complaint against Abousaoui in its entirety. A link to it is in the third sentence of this blog post. Comments from readers would be welcomed.


Friday, October 8, 2021

No. 441: The Massachusetts Securities Regulator Settles an Investigation of a Massachusetts Mutual Subsidiary

The Journal Article
On September 17, 2021, The Wall Street Journal carried a 600-word article on page B1 of the print edition entitled "GameStop Trader's Firm Is Fined—MassMutual faulted by regulator for lack of procedures to monitor activity of Keith Gill." The reporter was Caitlin McCabe. Here is the first paragraph of the article:
A Massachusetts Mutual Life Insurance Co. subsidiary agreed to pay a $4 million fine to settle an inquiry from Massachusetts securities regulators into the social-media and trading activity of its employees, including well-known GameStop Corp. investor Keith Gill.
The Two Consent Orders
William Francis Galvin is the Secretary of the Commonwealth of Massachusetts and heads the Massachusetts Securities Division. The settlement took the form of two Consent Orders, which readers may wish to review in their entirety, dated September 15, 2021 "In the Matter of MML Investors Services, LLC (MMLIS)."

One of the Consent Orders is Docket No. 2021-0004. Here is the first paragraph of the 18-page Consent Order:
This Consent Order is entered into by the Massachusetts Securities Division and MML Investors Services, LLC with respect to the investigation by the Division into whether MMLIS' activities and conduct violated the Massachusetts Uniform Securities Act, Gen. Laws ch. 110A, and the corresponding regulations promulgated thereunder at 950 Mass. Code Regs. 10.00 - 14.413.
The other Consent Order is Docket No. R-2019-0096. Here is the first paragraph of the 13-page Consent Order:
This Consent Order is entered into by the Massachusetts Securities Division and MML Investors Services, LLC with respect to the investigation by the Registration, Inspections, Compliance and Examinations Section of the Massachusetts Securities Division of the Office of the Secretary of the Commonwealth regarding MMLIS' failure to register its agents who conducted securities business in Massachusetts, as well as the individuals responsible for supervising the agents, in violation of the Massachusetts Uniform Securities Act, Mass. Gen. Laws ch. 110A and the corresponding regulations promulgated thereunder at 950 Mass. Code Regs. 10.00 - 14.413.
General Observations
The regulatory settlement discussed in this blog post is complex. I recommend that you read the Journal article mentioned at the beginning of this blog post and the two Consent Orders. I would welcome comments from readers.


Friday, October 1, 2021

No. 440: The 9/11 Commission Report

As the 20-year commemoration of the terrorist attack on the United States blanketed the nation, I realized I had not read the 9/11 Commission Report. I have remedied the failure by reading the 593-page Report in its entirety. I then decided to prepare this blog post.

The 9/11 Commission
Congress and President George W. Bush created the National Commission on Terrorist Attacks Upon the United States (Public Law 107-306, November 27, 2002). Ten Commissioners, consisting of five Republicans and five Democrats chosen by elected leaders from our nation's capital, came together to present the Report without dissent.

The Commission's Mandate
The Commission had a sweeping mandate: to investigate facts and circumstances relating to the terrorist attacks of September 11, 2001, including those relating to intelligence agencies, law enforcement agencies, diplomacy, immigration issues, border control, the flow of assets to terrorist organizations, commercial aviation, the role of congressional oversight and resource allocation, and other areas determined relevant by the Commission. The Commission held 29 days of hearings and took public testimony from 160 witnesses.

Thomas H. Kean was Chair of the Commission. Lee H. Hamilton was Vice Chair. The other members were Richard Ben-Veniste, Fred F. Fielding, James S. Gorelick, Slade Gorton, Bob Kerrey, John F. Lehman, Timothy J. Roemer, and James R. Thompson. Philip Zelikow was the Executive Director of the Commission Staff.

Structure of the Report
The first major section of the Report is entitled "Inside the Four Flights." It describes in excruciating detail what happened on the four hijacked flights: American Airlines Flight 11, United Airlines Flight 175, American Airlines Flight 77, and United Airlines Flight 93.

The second major section of the Report is about the Federal Aviation Administration (FAA) and the North American Aerospace Defense Command (NORAD). The third major section is about National Crisis Management. The fourth major section, about "The Foundation of the New Terrorism," focuses on Usama [sic] bin Laden and also discusses Al Qaeda and its renewal in Afghanistan.

The fifth major section is entitled "Counterterrorism Evolves." It discusses the Central Intelligence Agency, the National Security Agency, the Department of Defense, the State Department, the Federal Bureau of Investigation, the Defense Intelligence Agency, the Drug Enforcement Administration, the Immigration and Naturalization Service, and other agencies.

General Observations
I was impressed by the quality of the Report. I think it is well worth taking the time to read it in its entirety. A link to the Report is in the first paragraph of this blog post. I would welcome comments from readers.


Friday, September 24, 2021

No. 439: Another Class Action Lawsuit Against Genworth

The Halcom Lawsuit
On January 11, 2021, Judy Halcom and three other individuals filed a class action lawsuit against Genworth Life Insurance Company (GLIC) and Genworth Life Insurance Company of New York (GLICNY). In this case, the two defendants collectively are referred to as "Genworth." (See Halcom v. Genworth, U.S. District Court, Eastern District of Virginia, Case No. 3:21-cv-19.)

A Brief Summary
The introduction in the Halcom complaint describes the nature of the lawsuit. Here is the third paragraph of the introduction:
3. Since 2008, Genworth has steadily and substantially increased the premiums on these policies. To be clear, this case does not challenge Genworth's contractual right to increase these premiums, or its need for premium increases given changes in certain of Genworth's actuarial assumptions and the historical experience of these policy blocks. Nor does this case ask the Court to reconstitute any of the premium rates or otherwise substitute its judgment for that of any insurance regulator in approving the increased rates. Rather, this case seeks to remedy the harm caused to Plaintiffs and the Classes from Genworth's partial disclosures of material information when communicating the premium increases, and the omission of material information necessary to make those partial disclosures adequate. Without this material information, Plaintiffs and the Classes could not make informed decisions in response to the premium increases and ultimately made policy option renewal elections they never would have made had the Company adequately disclosed the staggering scope and magnitude of its internal rate increase action plans in the first place.
The Judge
The Halcom case was assigned to U.S. Senior District Court Judge Robert E. Payne. President George W. Bush nominated him in November 1991. The Senate confirmed him in May 1992. He assumed senior status in May 2007.

The Halcom Settlement
On August 30, 2021, Judge Payne issued an order granting preliminary approval of the Halcom settlement and directing notice to the class of over 146,000 members in all 50 states and the District of Columbia. He appointed Epiq Class Action & Claims Solutions, Inc. (Epiq) as administrator of the settlement, approved the class notice and the publication notice, and ordered Epiq to disseminate the class notice to class members within 60 days. He approved the form of the Special Election Letter to be mailed to class members, subject to possible changes by state insurance regulators. He described the procedure for exclusions and objections, set the final approval hearing for February 9, 2022, and attached a list of all the policy form numbers. He also attached the notice to class members (nine pages) and the publication notice (one page), which are here.

In the notice to class members, there is a section on attorneys' fees and litigation expenses. It says the class attorneys (the same attorneys who filed the Skochin complaint mentioned later), as part of the request for final approval of the settlement, will request (a) $1 million relating to the injunctive relief that is in the form of the disclosures, and (b) an additional contingent payment of 15 percent of certain amounts related to the class members' selection of options, but no greater than $18,500,000. None of the attorneys' fees will be deducted from the payments made to class members. Also, the class attorneys will request an award of litigation expenses of no more than $50,000. Genworth has agreed to pay all fees and expenses. The class attorneys will also request approval of payment of up to $15,000 for each of the four named plaintiffs.

Genworth's Comments on the Halcom Settlement
On August 5, 2021, Genworth filed its 10-Q report for the quarter ended June 30, 2021, with the Securities and Exchange Commission. On pages 66-67 of the report, Genworth made these comments on the proposed settlement of the Halcom case:
If we enter into a settlement consistent with the agreement in principle reached on June 18, 2021, we do not anticipate the result to have a material negative impact on our results of operations or financial position. If we do not enter into a final settlement, we intend to continue to vigorously defend this action.
The Eastern District of Virginia
The United States District Court for the Eastern District of Virginia (where Genworth is based) has a reputation as the fastest civil trial court in the United States. The Halcom case is an example. The complaint was filed on January 11, 2021. Genworth's answer to the complaint was filed on March 15. A pretrial conference was held on April 21. A scheduling order was issued on May 3. The parties were engaged in private mediation on May 27. The parties agreed to a settlement on June 30. The proposed settlement was filed on August 23. Preliminary approval of the settlement was granted on August 30. The settlement approval hearing on February 9, 2022 was set on September 2, 2021.

The Skochin Lawsuit
The Halcom case resembles the case of Skochin v. Genworth. My most recent update on Skochin is in No. 398 (November 13, 2020).

General Observations
I plan to post a follow-up to this blog post after Judge Payne grants final approval of the Halcom settlement.


Friday, September 17, 2021

No. 438: The Texas Republicans' Abortion Law

The Texas Abortion Law
The Republican-controlled Texas legislature recently enacted, and the Republican governor of Texas signed, a frightening abortion law that took effect at midnight on September 1, 2021. Opponents immediately asked the U.S. Supreme Court to rule that the law is unconstitutional. In a shocking development, the Supreme Court denied the request in a 5 to 4 Court order, with Chief Justice Roberts joining with the three liberal justices.

The Sotomayor Dissent
Justice Sonia Sotomayor wrote a powerful dissenting opinion, with which liberal Justices Breyer and Kagan joined. The first paragraph and the last two paragraphs of the Sotomayor dissent read as follows:
The Court order is stunning. Presented with an application to enjoin a flagrantly unconstitutional law engineered to prohibit women from exercising their constitutional rights and evade judicial scrutiny, a majority of Justices have opted to bury their heads in the sand. Last night, the Court silently acquiesced in a state enactment of a law that flouts nearly 50 years of federal precedents. Today, the Court belatedly explains that it declined to grant relief because of procedural complexities of the State's own invention. Ante, at 1. Because the Court's failure to act rewards tactics designed to avoid judicial review and inflict significant harm on the applicants and on women seeking abortions in Texas, I dissent....
The Court should not be so content to ignore its constitutional obligations to protect not only the rights of women, but also the sanctity of its precedents and of the rule of law.
I dissent.
Dissenters normally say "I respectfully dissent." In this instance, Sotomayor said "I dissent." I recommend that you read the full Sotomayor dissent and the related filings (12 pages).

The Garland Statement
On September 6, the U.S. Department of Justice released a statement from U.S. Attorney General Merrick B. Garland about the Texas abortion law. Here is the full statement:
While the Justice Department urgently explores all options to challenge [the Texas abortion law] in order to protect the constitutional rights of women and other persons, including access to an abortion, we will continue to protect those seeking to obtain or provide reproductive health services pursuant to our criminal and civil enforcement of the FACE Act, 18 U.S.C. § 248.
The FACE Act prohibits the use or threat of force and physical obstruction that injures, intimidates, or interferes with a person seeking to obtain or provide reproductive health services. It also prohibits intentional property damage of a facility providing reproductive health services. The department has consistently obtained criminal and civil remedies for violations of the FACE Act since it was signed into law in 1994, and it will continue to do so now.
The department will provide support from federal law enforcement when an abortion clinic or reproductive health center is under attack. We have reached out to U.S. Attorneys' Offices and FBI field offices in Texas and across the country to discuss our enforcement authorities.
We will not tolerate violence against those seeking to obtain or provide reproductive health services, physical obstruction or property damage in violation of the FACE Act.
General Observations
My blog posts usually are devoted to insurance matters. However, the Texas abortion law is so outrageous that I decided to comment on it.


Friday, September 10, 2021

No. 437: The Securities and Exchange Commission Files a Civil Lawsuit Against Several Investment Promoters

On August 20, 2021, the Securities and Exchange Commission (SEC) filed a civil lawsuit in federal court in San Antonio against Robert J. Mueller (Mueller) and several other investment promoters. The defendants allegedly persuaded investors, many of whom are retirees, to cash out annuities and individual retirement accounts they held with other investment companies and invest in funds promoted by the defendants. (See SEC v. Mueller et al., U.S. District Court, Western District of Texas, Case No. 5:21-cv-785.)

The SEC Complaint
The SEC complaint (24 pages) contains eight counts alleging violations of federal securities laws. The SEC seeks a permanent injunction, disgorgement of ill-gotten gains, and payment of a civil penalty.

The Judge
The case has been assigned to U.S. District Court Judge Xavier Rodriguez. President George W. Bush nominated him, and he assumed office on August 1, 2003.

General Observations
This case is in its very early stages. The defendants have not yet filed an answer to the complaint. I plan to report significant developments.


Friday, September 3, 2021

No. 436: More on the $97 Million Regulatory Settlement Imposed on TIAA

In No. 434 (August 18, 2021), I reported on the $97 million regulatory settlement imposed on The Teachers Insurance and Annuity Association of America (TIAA) by the Securities and Exchange Commission (SEC) and the New York State Attorney General (NYAG). On August 20, I received an email from a former Wealth Management Advisor (WMA) at TIAA. In response to that email, I sent the former WMA links to three earlier blog posts about developments at TIAA. The purpose of this follow-up is to share those three earlier posts with other readers. In each of the posts, I offered a complimentary package of additional material; those packages remain available upon request.

The Earlier Blog Posts
The first of the earlier blog posts is No. 68 (September 22, 2014) entitled "TIAA, Moody's, and Surplus Notes." In it, I offered the September 2014 TIAA package.

The second of the earlier blog posts is No. 240 (November 9, 2017) entitled "TIAA-CREF Under the Microscope." In it, I offered the November 2017 TIAA package.

The third of the earlier blog posts is No. 321 (July 9, 2019) entitled "TIAA Is Exiting the Life Insurance Business." In it, I offered the July 2019 TIAA package.

More on Surplus Notes
Surplus notes have a long and interesting history in the insurance business in the United States. TIAA and The Northwestern Mutual Life Insurance Company (Milwaukee, WI) were the last two holdouts against what became the widespread use of these extraordinary financial instruments.

My 2015 book entitled The Insurance Forum: A Memoir contains a chapter devoted to the subject of surplus notes. For readers who might be interested, here is a link to Chapter 25.


Friday, August 27, 2021

No. 435: Ohio National Is the Defendant in a Job Discrimination Lawsuit

The Modified Work Schedule
Jessica Walker (Walker), an Ohio resident, was employed by Ohio National Financial Services. Inc. (Ohio National) from July 7, 2012 to July 31, 2017. In 2017, Ohio National announced it would implement a modified full-time work schedule that would be available to some employees. It was Walker's understanding that the modified work schedule was to benefit female employees with young children. In July 2017, Walker expressed concerns about the modified work schedule not being offered to all similarly situated employees.

The Meeting
On Friday, July 28, 2017, Walker met with several Ohio National officials to discuss her concerns. During the meeting, Walker said that, if the company did not offer the same work schedule to all similarly situated employees, she would likely contact the Equal Employment Opportunity Commission (EEOC) to determine if the disparate treatment would be unlawful. On Monday, July 31, 2017, Ohio National terminated Walker's employment.

The Lawsuit
On April 13, 2021, Walker received a "right to sue" letter from the Indianapolis office of the EEOC. On July 1, Walker filed a job discrimination lawsuit against Ohio National in federal court in Ohio. The "right to sue" letter is attached to the complaint as an exhibit. The complaint and exhibits are here. In her complaint, Walker said she had exhausted her administrative remedies by filing a charge of retaliation with the EEOC alleging that the company had terminated her employment because she had indicated her intent to contact the EEOC. (See Walker v. Ohio National, U.S. District Court, Southern District of Ohio, Case No. 1:21-cv-448.)

The One Claim for Relief
Walker's complaint contains one claim for relief. She alleges that Ohio National's actions constitute retaliation in violation of Title VII of the Civil Rights Act of 1964. She seeks lost wages, fringe benefits, compensatory and punitive damages, and attorney fees and costs.

The Judge
The case has been assigned to U.S. District Judge Donald R. Cole. President Trump nominated him in May 2019. The Senate confirmed him in December 2019.

General Observations
This lawsuit is in its early stages. I think it is likely that the case will be settled. I plan to report significant developments.


Wednesday, August 18, 2021

No. 434: Regulators Impose a $97 Million Settlement on TIAA

On July 13, 2021, the Securities and Exchange Commission (SEC) and the New York State Attorney General (NYAG) announced a $97 million enforcement action against Teachers Insurance and Annuity Association of America (TIAA). Here are the title and the subtitle of the SEC press release:
SEC Announces $97 Million Enforcement Action Against TIAA Subsidiary for Violations in Retirement Rollover Recommendations.
SEC and N.Y. Attorney General Secure Significant Relief for Investors and Reforms at TIAA.
The SEC Action
The SEC action took the form of a 17-page Order. Here are the first two paragraphs of the summary in the Order:
  1. This matter concerns TIAA's failure to disclose adequately conflicts of interest and dissemination of inaccurate and misleading statements in connection with recommendations that clients invested in TIAA employer-sponsored retirement plans (ESPs) roll over retirement assets into a managed account program called "Portfolio Advisor." TIAA had a conflict of interest because Portfolio Advisor generated greater revenue than other available alternatives.
  2. From January 1, 2013 through March 30, 2018, TIAA created positive incentives and negative pressures for its Wealth Management Advisors (WMAs) to prioritize the rollover of ESP assets into Portfolio Advisor over lower cost alternatives for rollover-eligible ESP participants who were receiving advisory services as part of the financial planning process TIAA offered. Those incentives and pressures included: (1) an incentive compensation plan that paid WMAs more in variable compensation when they signed clients up for the Portfolio Advisor program than for some alternatives, and (2) negative consequences for failure to meet related targets, including the placement of some WMAs on performance improvement plans and the threat of termination of employment. TIAA also trained WMAs to use the rollover process to discover areas of vulnerability for these clients, called "pain points," to "create pain" by helping clients "self-realize" the financial vulnerability, and then to recommend Portfolio Advisor as the solution to their problem.
The NYAG Action
The NYAG action took the form of a 24-page Assurance of Discontinuance. Here are the first two paragraphs of the NYAG's findings in the Assurance of Discontinuance:
  1. Beginning in or about 2012, TIAA and its salespeople used a false and misleading marketing pitch to convince investors to roll over assets from low-fee employer-sponsored retirement plans to individual managed accounts in TIAA's Portfolio Advisor program, on which TIAA charged lucrative management fees. TIA trained its salespeople to describe themselves as "objective, non-commissioned" advisors. In truth, TIAA's salespeople had a serious conflict of interest, since they were heavily incentivized—through financial compensation and supervisory and disciplinary pressures—to identify clients' "pain points" and recommend Portfolio Advisor as the preferred solution. In many cases, TIAA salespeople also presented clients with a misleading comparison of their investment options, promoting managed accounts as the only alternative to self-directed investment while downplaying or omitting advantages of employer-sponsored plans.
  2. TIAA has earned hundreds of millions of dollars in management fees on Portfolio Advisor accounts that clients opened with assets rolled over from employer-sponsored plans.
General Observations
I think the SEC/NYAG enforcement action against TIAA is an important development. For readers to understand it fully, I recommend you read in their entirety the SEC Order and the NYAG Assurance of Discontinuance. Those documents are available through links provided in this blog post.

Personal Observations
I joined the faculty of Indiana University (IU) in 1962. One year later, I was enrolled automatically in IU's faculty retirement plan with TIAA and its affiliated College Retirement Equities Fund (CREF). Since my retirement from IU, I have been receiving distributions from CREF. Thus I have had personal experience with TIAA and CREF for almost 60 years. Except for some minor administrative problems from time to time, my experience with TIAA and CREF has been satisfactory. Therefore, the news of the SEC/NYAG investigation came as a surprise and a disappointment. I knew personally some of the people (all now deceased) who were involved in the creation of IU's early relationship with TIAA. I think they would have been shocked by the findings of the SEC/NYAG investigation.


Thursday, August 12, 2021

No. 433: Executive Compensation in the Insurance Industry—2020 Data from 2021 Filings with New York

In No. 428 (July 7, 2021), I reminded readers that I started publishing insurance industry executive compensation data in 1975 in The Insurance Forum, my monthly newsletter. I continued doing so on my blog after ending the Forum in December 2013.

My three sources of data have been the Securities and Exchange Commission (SEC), the Nebraska Department of Insurance (NDI), and the New York State Department of Financial Services (NYDFS). In No. 428, I showed data for 2020 from 2021 filings with the SEC. In No. 431 (August 4, 2021), I showed data for 2020 from 2021 filings with the NDI. Here I show data for 2020 from 2021 filings with the NYDFS.

In the tabulation below, I show the NYDFS data for individuals who received at least $5 million in 2020. Where two or more individuals in a company are shown, they are listed in descending order of compensation.

NYDFS data are filed by life insurance companies doing business in New York State, and by health insurance companies doing business there. The data are from the 2020 "Schedule G," which is in the New York Supplement to the statutory annual statement. I obtained the Schedule Gs through a request pursuant to the New York State Freedom of Information Law. The Life Bureau of the NYDFS sent the Schedule Gs for life insurance companies, and the Health Bureau of the NYDFS sent the Schedule Gs for health insurance companies. Both bureaus provided the schedules without charge.

The Schedule G for life insurance companies differs significantly from the Schedule G for health insurance companies. The Schedule G for life insurance companies shows one figure for each individual. It is "the aggregate amount (any and all remuneration, including all wages, salaries, commissions, stock grants, gains from the exercise of stock options and other emoluments) received by the payee attributable to services performed for, or on behalf of, the reporting insurer, regardless of whether the payee is employed and paid by the insurer or a related or affiliated company."

The Schedule G for health insurance companies shows four figures for each individual: (1) "salary paid by company and all other companies in holding company system," (2) "bonus & all other compensation deferred or paid by company and all other companies in holding company system," (3) "total amount paid by company and all other companies in holding company system," and (4) "amount paid by or amount allocated to company." I show the third of those four figures, which is the sum of the first two figures.

Pursuant to changes made several years ago in the New York State executive compensation disclosure statute to curtail the amount of compensation data available to the public, the names of individuals are sometimes redacted, so that the Schedule G sometimes shows only the amounts of compensation and the titles of certain individuals. In those instances, I show the individual's title and the amount of compensation.

NYDFS Data for 2020
Life Insurance Companies
Aetna Life Ins Co
EVP, Integration $11,129,096
American National Life of NY
James E Pozzi 6,028,583
Equitable Financial Life Ins Co
Mark Pearson 6,958,433
First Health Life & Health Ins Co
Karen S Lynch 10,730,916
Alec R Cunningham 5,465,563
Globe Life Ins Co of NY
Frank Martin Svoboda 7,807,475
William M Pressley 6,746,829
Guardian Life Ins Co of America
Deanna Mulligan 10,300,764
Eric Dinallo 5,517,427
Lincoln Life Assur Co of Boston
Dennis R Glass 20,090,545
Randal J Freitag 5,878,200
Wilford H Fuller 5,753,626
Massachusetts Mutual Life Ins Co
Roger Crandall 21,875,488
Melvin Corbett 8,489,343
Michael Fanning 7,700,159
Metropolitan Life Ins Co
Michel Abbas Khalaf 7,624,215
EVP & Chief Investment Officer 5,239,381
New York Life Ins Co
Theodore A Mathas 24,238,639
Matthew M Grove 10,739,520
Anthony R Malloy 6,265,631
Yie-Hsin Hung 5,340,371
Northwestern Mutual Life Ins Co
John E Schlifske 18,018,703
Principal Life Ins Co
Karl W Nolin 9,434,249
Daniel Joseph Houston 6,240,643
Kelly D Rush 5,696,725
Prudential Ins Co of America
Charles Lowrey 6,347,293
Robert Michael Falzon 5,090,249
Stephen Pelletier 5,051,205
Securian Life Ins Co
Christopher Michael Hilger 6,479,342
Teachers Ins & Annuity Assn
Roger Ferguson 6,127,887
Health Insurance Companies
Anthem Ins Companies Inc
Gail A Koziara Boudreaux $16,306,318
Gloria M McCarthy 5,096,581
John E Gallina 5,091,054
Peter David Haytaian 5,091,054
Delta Dental Ins Co
Michael J Castro 9,523,333
Hallmark Life Ins Co
Michael F Neidorff 73,772,977
Jesse N Hunter 12,046,956
Health Ins Plan of Greater NY
Karen M Ignagni 5,342,500
Timothy Nolan 5,074,404
Humana Ins Co of NY
Brian Andrew Kane 18,738,968
Christopher Howal Hunter 6,157,542
Timothy Alan Wheatley 6,072,881
Mutual of Omaha Ins Co
James T Blackledge 6,648,722
Solstice Health Ins Co
Leonard Weiss DMD 5,486,569
UnitedHealthcare Ins Co of NY
Peter Marshall Gill 11,167,181
William John Golden 8,587,204
WellCare Prescription Ins Inc
Andrew Lynn Asher 16,259,880
Jeffrey Alan Schwaneke 15,136,733


Wednesday, August 4, 2021

No. 432: Thomas Joseph Barrack—The Indictment Against Him and Two Others

On July 16, 2021, the U.S. Attorney's office in the Eastern District of New York filed in federal court a sealed 46-page indictment against Thomas Joseph Barrack (Barrack) and two other individuals. The indictment was unsealed the same day. The seven counts against Barrack are: (1) Acting as Agent of a Foreign Government Without Prior Notification to the Attorney General, (2) Conspiracy to Act as Unregistered Agent of a Foreign Government, (3) Obstruction of Justice, and four counts of Material False Statements. (See Barrack et al., U.S. District Court, Eastern District of New York, Case No. 1:21-cr-371.)

The Judge
The case was assigned to U.S. Senior District Court Judge Brian M. Cogan. President George W. Bush nominated him in January 2006. The Senate confirmed him in May 2006. He assumed senior status in June 2020.

Barrack is a U.S. citizen residing primarily in California. He served as Executive Chairman of a global investment management firm headquartered in Los Angeles. From about April 2016 to about November 2016, he served as an informal advisor to the campaign of Presidential candidate Donald J. Trump. From about November 2016 to January 2017, he served as Chairman of the Presidential Inaugural Committee. Beginning in January 2017, he informally advised senior U.S. government officials on issues related to U.S. foreign policy in the Middle East. He also sought appointment to a senior role in the U.S. government, including the role of Special Envoy to the Middle East. Here is paragraph 13 of the indictment:
Government officials in the United Arab Emirates, including Emirati Official 1, Emirati Official 2, Emirati Official 3, and Emirati Official 4, tasked the defendants [including Barrack] with, variously and among other things, (a) influencing public opinion, the foreign policy positions of the Campaign and the foreign policy positions of the United States government; (b) obtaining information about foreign policy positions and related decision-making within the Campaign and, at times, the United States government; (c) developing a backchannel line of communication with the Campaign and, at times, officials of the United States government; and (d) developing plans to increase the United Arab Emirates' political influence and to promote its foreign policy preferences.
Following that paragraph are ten subsections of the indictment. They are: (1) Initial Meeting and the Energy Speech, (2) Media Appearances, (3) Preparation of Strategy to Promote Emirati Policy Interests and Meeting in Morocco, (4) The Encrypted Messaging Application, (5) The BARRACK Op-Ed, (6) Assistance to United Arab Emirates During the Presidential Transition, (7) Assistance to the United Arab Emirates in the New Presidential Administration, (8) Assistance to the United Arab Emirates with Appointments in the New Presidential Administration, (9) Emirati Official 1's White House Visit, and (10) The Qatari Blockade and Continuing Efforts to Assist the United Arab Emirates.

The Arraignment
On July 26, Barrack was arraigned in New York City. He entered a plea of not guilty on all counts. He was required to post a bond of $250 million, and was then released pending a conference to be held before Judge Cogan on September 2 at 10:00 a.m. He was required to surrender all his passports. He will be subject to severe travel restrictions and continuous electronic surveillance.

General Observations
According to recent news reports, the indictment was ready to go a long time ago. Two members of Congress have asked the inspector general of the Department of Justice to investigate the delay.

I think the indictment in this case is an amazing document. I strongly recommend that you read it in full. It is available through the link in the first sentence of this blog post.


Wednesday, July 28, 2021

No. 431: Executive Compensation in the Insurance Industry—Data for 2020 from 2021 Filings with Nebraska

In No. 428 (July 7, 2021), I reminded readers that I started publishing insurance industry executive compensation data in 1975 in The Insurance Forum, my monthly newsletter. I continued doing so on my blog after ending the Forum in December 2013. My three sources of data have been the Securities and Exchange Commission (SEC), the Nebraska Department of Insurance (NDI), and the New York State Department of Financial Services (NYDFS). In No. 428, I showed data for 2020 from 2021 filings with the SEC. Here I show data for 2020 from 2021 filings with the NDI. I plan to show data for 2020 from the NYDFS later.

NDI Data
In the tabulation below, I show NDI data for individuals who received at least $5 million in 2020. Where two or more individuals in a company are shown, they are listed in descending order of compensation.

NDI data are in a "Supplemental Compensation Exhibit" (Exhibit) filed by each insurance company doing business in Nebraska. Each Exhibit normally shows figures for the top ten company officials. The figure I show for each individual is the "Total." The seven components of the "Total" are "Salary," "Bonus," "Stock Awards," "Option Awards," "Sign-on Payments," "Severance Payments," and "All Other Compensation." NDI provides all the Exhibits on a CD to any member of the public for $80.

The Allocation Problem
Where companies are members of a Holding Company Group ("Group"), many companies show the total amount received by each individual from all companies in the Group. Some companies, however, allocate each individual's compensation to each company in the Group.

For companies that allocate, it is extremely difficult to locate all companies doing business in Nebraska that are part of a Group. For that reason, as I did last year, I have modified the tabulation below from years prior to 2020 by not trying to assemble the Group data. Instead, with one exception noted below, I show figures for the company with the largest dollar amounts for each Group. Because of the modification, the compensation figure shown for many individuals is smaller, and often much smaller, than the individual's total compensation from all members of the Group. Also, because of the modification, some companies probably are not listed because no individual had at least $5 million of compensation from a single company in the Group.

The Liberty Mutual Group Exception
The Liberty Mutual Group is a special case. Unlike any other company, the Exhibit for Liberty Mutual Insurance Company makes clear that the total compensation paid to each executive from all members of the Group is exactly twice the figure shown in the Exhibit. I have therefore shown in the tabulation below the larger figure for each executive listed.

NDI Data for 2020
Accident Fund General Ins Co
Elizabeth Haar $8,684,745
Ace Fire Underwriters Ins Co
John J Lupica 6,630,000
Paul J Krump 5,650,000
Acuity A Mutual Ins Co
Benjamin M Salzmann 17,998,084
Aetna Life Ins Co
Karen S Lynch 10,730,916
Alec R Cunningham 5,465,563
Affiliated FM Ins Co
Thomas A Lawson 5,564,595
AIG Assurance Co
Alexander Ross Baugh 5,954,901
Allstate Ins Co
Thomas J Wilson 18,009,544
Dogan Civgin 5,873,381
Terrence Williams 5,699,432
Glenn T Shapiro 5,032,673
Ambac Assurance Corp
Claude LeBlanc 6,022,820
American Family Ins Co
Jack C Salzwedel 12,359,016
William B Westrate 6,217,990
American Family Life Assur (AFLAC)
Daniel P Amos 14,367,561
American General Life Ins Co
Kevin Hogan 5,111,283
American National Ins Co
James E Pozzi 6,028,583
American Pet Ins Co
Tim Graff 5,013,734
American United Life Ins Co
James S Davison 6,019,250
Sy Foguel 5,322,285
Assured Guaranty Corp
Dominic Frederico 11,963,691
Auto-Owners Ins Co
Carolyn B Muller 6,065,377
Brighthouse Life Ins Co
Eric T Steigerwalt 8,890,177
Chicago Title Ins Co
Raymond Randall Quirk 18,168,514
Michael Joseph Nolan 5,597,464
Cincinnati Ins Co
Steven J Johnston 5,765,855
Continental Casualty Co
Dino Robusto 7,951,499
Contractors Bonding & Ins Co
Jonathan E Michael 7,114,515
Crum & Forster Indemnity Co
Marc James Adee 6,191,370
Employers Assurance Co
Douglas Dean Dirks 5,624,736
Equitable Financial Life Ins Co
Mark Pearson 6,958,432
Essent Guaranty Inc
Mark Casale 7,570,910
Everest Reinsurance Co
Mark Kociancic 5,292,109
Juan C Andrade 5,223,820
Farmers Ins Exchange
Jeffrey J Dailey 7,084,202
Fidelity & Guaranty Life Ins Co
Christopher O Blunt 8,082,752
First American Title Ins Co
Dennis Gilmore 11,020,220
Kenneth DeGiorgio 7,766,153
George Livermore 6,432,197
Mark Seaton 5,392,110
Christopher Leavell 5,094,983
GEICO Indemnity Co
Olza Minor Nicely 77,879,001
William Evan Roberts 14,169,158
Todd Anthony Combs 9,730,769
Genworth Financial Group
Kevin Douglas Schneider 7,724,612
Thomas McInerney 7,317,588
Daniel Joseph Sheehan IV 7,126,812
Globe Life & Accident Ins Co
Frank M Svoboda 7,807,475
William M Pressley 6,746,829
Great American Ins Co
Carl H Lindner III 10,346,831
Great-West Life & Annuity Ins Co
Edmund F Murphy 6,811,265
Guardian Life Ins Co of America
Deanna Mulligan 10,300,764
Eric Dinallo 5,517,427
Hanover Ins Co
John Roche 5,467,660
Hartford Fire Ins Co
Christopher Swift 5,560,332
Douglas G Elliot 5,286,046
Health Care Service Corp
David Lesar 16,967,386
Paula Steiner 12,647,352
Milton Carroll 8,918,153
Blair Todt 6,361,493
Maurice Smith 5,904,535
Danny McCoy 5,079,145
Horace Mann Ins Co
Marita Zuraitis 5,853,495
Humana Ins Co
Bruce D Broussard 23,173,229
Brian A Kane 18,738,969
Christopher Howal Hunter 6,157,542
T Alan Wheatley 6,072,881
William K Fleming 5,499,625
Insurance Co of the West
Kevin Prior 18,068,044
ISMIE Mutual Ins Co
Alexander R Lerner 5,119,812
John Hancock Life Ins Co (USA)
Daniel Janis III 6,692,374
Emory Sanders Jr 6,386,545
Christopher Conkey 5,242,891
Liberty Mutual Group
David H Long 23,180,342
Dennis J Langwell 13,030,176
Timothy Sweeney 11,347,194
Christopher L Peirce 8,715,066
Neeti Bhalla Johnson 8,242,320
James F Kelleher 7,423,518
James M McGlennon 6,780,962
LifeSecure Ins Co
Ken Dallafior 5,885,498
Lincoln Life Assur Co of Boston
Dennis R Glass 20,090,544
Randal J Freitag 5,878,201
Wilford H Fuller 5,753,626
Massachusetts Mutual Life Ins Co
Roger Crandall 16,916,485
Michael Fanning 6,397,603
Elizabeth Chicares 5,314,695
Melvin Corbett 5,069,947
Metropolitan Group
Michel Khalaf 7,624,215
Steven J Goulart 6,338,392
Midland National Life Ins Co
Esfandyar E Dinshaw 6,186,835
Minnesota Life Ins Co
Christopher M Hilger 6,479,342
Mortgage Guaranty Ins Corp
Timothy Mattke 6,686,421
Munich Reinsurance America Inc
Anthony J Kuczinski 5,222,034
National Western Life Ins Co
Ross R Moody 8,191,259
New York Life Ins Co
Theodore A Mathas 24,238,639
Matthew M Grove 10,739,520
Anthony R Malloy 6,265,631
Yie-Hsin Hung 5,340,371
Northwestern Mutual Life Ins Co
John E Schlifske 18,018,703
Ohio National Life Ins Co
Gary Thomas Huffman 16,443,349
Pacific Life Ins Co
James T Morris 8,174,088
Penn Mutual Life Ins Co
Eileen McDonnell 6,276,600
David M O'Malley 5,168,950
Principal Life Ins Co
Karl W Nolin 9,434,249
Daniel J Houston 6,240,643
Kelly D Rush 5,696,725
Protective Life Ins Co
Carl Thigpen 21,716,296
Richard Bielen 6,092,393
Prudential Ins Co of America
Charles Frederick Lowrey 8,332,876
Robert Michael Falzon 6,657,252
Stephen Pelletier 5,641,262
QCC Ins Co
Daniel J Hilferty 9,926,721
Radian Guaranty Inc
Richard A Thornberry 7,723,478
RiverSource Life Ins Co
John R Woerner 7,695,824
Security Benefit Life Ins Co
Michael Patrick Kiley 7,721,877
Selective Ins Co of America
Gregory Murphy 5,690,743
Stephen C Hilbert 5,839,167
Standard Ins Co
John Gregory Ness 14,187,730
State Farm Group
Michael Leon Tipsord 20,266,506
Paul Joseph Smith 6,812,210
Randall Houston Harbert 6,806,447
Mary Angela Schmidt 6,048,516
Teachers Ins & Annuity Assn
Roger Ferguson 6,127,887
Transatlantic Reinsurance Co
Michael C Sapnar 9,546,207
Kenneth Apfel 5,708,125
Travelers Casualty Co
Alan D Schnitzer 18,184,834
Avrohom J Kess 6,325,135
United States Liability Ins Co
Thomas P Nerney 18,198,604
Voya Retirement Ins & Annuity Co
Rodney Owen Martin Jr 5,975,117
Westcor Land Title Ins Co
Mary O'Donnell 5,326,688
Western & Southern Life Ins Co
John Barrett 11,495,043
Wilton Reassurance Co
Michael Fleitz 22,564,030
Michael Greer 21,792,750
Mark Sarlitto 21,463,100
Chris Stroup 20,524,898
Enrico Treglia 15,068,725
Andrew Wood 14,914,350
Ray Eckert 13,592,822
Perry Braun 7,616,725


Wednesday, July 21, 2021

No. 430: Academic Freedom, Tenure, and Nikole Hannah-Jones

The Howard Press Release
On July 5, 2021, Howard University (Washington, DC) issued a press release announcing that Nikole Hannah-Jones, a prominent Black journalist at The New York Times, is joining the Howard faculty. She will be a tenured professor in Howard's Cathy Hughes School of Communications. Hannah-Jones will occupy the newly created Knight Chair in Race and Journalism. In 2020, Hannah-Jones received a Pulitzer Prize for her work in establishing The 1619 Project.

The LDF Press Release
The events that preceded the Hannah-Jones move to Howard provide a powerful lesson in the importance of academic freedom. On July 6, the Leadership Defense Fund (LDF) of The National Association for the Advancement of Colored People issued a press release entitled:
Nikole Hannah-Jones Issues Statement on Decision to Decline Tenure Offer at University of North Carolina-Chapel Hill and to Accept Knight Chair Appointment at Howard University
The LDF web site provided in full a lengthy explanatory statement by Hannah-Jones. That caught the attention of Dan Rather, a well-known former television reporter who is highly regarded by many people (including me). He is now retired and publishes an email newsletter called Steady. On July 9, Dan Rather, Elliot Kirschner, and the Steady team published a piece entitled "In Defense of Freedom—of the Press and the Academy," and published in it the entire Hannah-Jones statement as it appeared on the LDF web site. I strongly recommend you read it in full.

A Personal Experience
The Hannah-Jones story reminded me of a personal experience relating to academic freedom. I joined the Indiana University (IU) faculty in 1962. My research was controversial in life insurance circles, and it generated complaints to IU from prominent alumni in the life insurance business. IU provided me with complete academic freedom, even in the years before I was granted tenure.

IU strongly protects the academic freedom of its faculty. A vivid example was the furor over Professor Alfred Kinsey's research on human sexual behavior. When I mentioned to a colleague my concerns over the complaints against me, he said: "Joe, you don't understand. Indiana University is where Alfred Kinsey did his research."

In my 2015 book entitled The Insurance Forum: A Memoir, I described an incident that occurred in 1965. Here is what I said in the book:
A friend on the faculty at a university in a state other than Indiana invited me to visit his school and present a guest lecture. He said his school might offer me a faculty position. He told me his school would cover my travel expenses. I made the visit, presented the lecture, and met some people there.
Shortly after my return to Bloomington, I received a telephone call from my friend informing me the expense check was in the mail. He said he had bad news he felt obligated to share. He said he was embarrassed to inform me there would be no offer of a position. He explained that the chief executive officer of a major insurance company in the school's state had learned of my visit and had told school officials there would be no further contributions by the company to the school if I was appointed to the faculty. My friend said his school decided it could not afford to antagonize a major donor.
My immediate thought was that a financial threat by a donor to influence a faculty hiring decision is not tolerated by a great university, and I was grateful to have avoided a disastrous career move. All I said to my friend was that I understood, and I thanked him for the explanation. That was the first and last time I considered leaving Indiana University.