(Updated with correction)
The normally sedate actuarial world has been rocked by an ugly feud between the board of the American Academy of Actuaries and the president-elect it's trying to oust.
On Aug. 5, 27 of the board's 29 members met in executive session either in person or by phone to discuss a letter that had been signed by 19 of the academy's past presidents raising concerns about Bruce Schobel and agreed by majority vote to remove him as president-elect. The contents of the letter have not been disclosed.
Mr. Schobel then filed a federal lawsuit on Sept. 1 against the academy, seeking to retain his post.
John P. Parks, the academy's current president, declined to comment, citing pending litigation. Andrew Simonelli, spokesman for the Washington-based academy, also declined to comment on the lawsuit or Mr. Schobel's removal. Court documents, however, reveal the academy contends its board is well within its rights to remove Mr. Schobel.
Mr. Schobel's lawsuit, filed in U.S. District Court in Washington, seeks an award in excess of $1 million for punitive damages. It accuses the letter's authors of disseminating "false and defamatory." information about such things as an unrelated business dispute and events that occurred more than three decades ago.
Mr. Schobel was unanimously elected by the board last October to serve as president-elect. He was expected to become president and director of the academy for a one-year term starting Oct. 26.
(Mr. Schobel is a vice president and actuary in the tax department of New York Life Insurance Co., confirmed William Werfelman, a spokesman for the company. New York Life is not involved in the suit.)
The suit accuses the academy of publishing and disseminating false statements about Mr. Schobel and causing substantial damage to his reputation. The academy's actions imply that Mr. Schobel "committed some type of serious misconduct in his position or generally that would support the removal for the first time in the academy's 40-year history of a director and/or officer of the academy," the suit alleges.
In support of that claim, the lawsuit points to recent postings on Actuarial Outpost, an online message board, where several members have speculated on why Mr. Schobel was ousted. One posting, cited in the suit, makes reference to an actuary who served prison time for securities fraud but still maintained his academy membership, and concluded, "we can only assume that Bruce did something worse than that."
The suit also claims the academy board acted improperly in its vote because Mr. Schobel wasn't given sufficient opportunity to defend himself and that some of the board members should not have been allowed to vote by telephone. Also, because the board's attempt to remove him is invalid under Illinois state law, where the academy is incorporated as a not-for-profit organization, he remains president-elect, the suit claims.
Mr. Schobel on Sept. 3 sought a temporary restraining order against the ouster; a decision is expected on Sept. 9.
Mr. Schobel's attorney, David Wachen, with Shulman, Rogers, Gandal, Pordy & Ecker in Potomac, Md., declined to comment.