A Chicago-based investment adviser and its former partner agreed to pay nearly $1.6 million in combined penalties to settle charges by the Securities and Exchange Commission (SEC) that they misled a Pennsylvania school pension fund.

Aon Investments USA agreed to pay a $1 million civil penalty and more than $540,000 in disgorgement and prejudgment interest for misleading the client, the SEC announced in a press release Thursday. Aon’s former partner, Claire Shaughnessy, agreed to pay a $30,000 penalty. Both the firm and Shaughnessy also agreed to be censured.

The details: Aon and Shaughnessy were responsible for calculating investment returns for the Pennsylvania Public School Employees’ Retirement System (PSERS), according to the SEC’s order.

A provision under Pennsylvania law requires public school employees to contribute more to their pensions if the retirement fund does not meet certain return rates, per the order. The calculation, called “risk share,” requires additional contributions if the return rate falls below 6.36 percent, the SEC said.

The firm and Shaughnessy failed to adequately investigate discrepancies between the fund’s historical returns and returns used to calculate the risk share, the order alleged.

In December 2020, Aon and Shaughnessy reported to PSERS the return rate for that period was 6.38 percent—high enough to avoid triggering risk share, per the order. However, because of discrepancies causing errors in the underlying data, the correct return rate was 6.34 percent. Upon discovery of the error, Aon did not fully investigate or disclose its impact, the SEC alleged.

Compliance considerations: In determining to accept the settlement, the SEC said it considered unspecified remedial acts promptly undertaken by Aon and cooperation given to commission staff.

Aon did not respond to a request for comment. The firm and Shaughnessy agreed to the settlement without admitting or denying the SEC’s findings.