US SEC Charges Allianz Global Investors with Multibillion-Dollar Fraud

Tuesday, 17/05/2022 | 19:43 GMT by Felipe Erazo
  • Allianz Global Investors and three former senior portfolio managers are involved.
  • Investors agreed to pay over $1 billion to resolve charges.
US SEC
US SEC

On Tuesday, the US Securities and Exchange Commission (SEC ) said that it had charged Allianz Global Investors US LLC (AGI US) and three former senior portfolio managers with multibillion-dollar securities fraud.

According to the press release, they were allegedly involved in a massive fraudulent scheme that concealed the ‘immense downside’ risks of a complex options trading strategy they called ‘Structured Alpha’. Around 114 institutional investors purchased the strategy from AGI US, including pension funds for teachers, clergy, bus drivers, engineers and other individuals. As a result of AGI US and the portfolio managers’ misconduct, billions of dollars were lost as a result of the COVID-19 market crash in March 2020.

In an integrated, global resolution, AGI US has agreed to pay billions of dollars, including $1 billion to settle SEC charges and over $5 billion in restitution to victims along with its parent company, Allianz SE.

Case Background

According to the SEC complaint, filed in federal court in Manhattan, Structured Alpha’s Lead Portfolio Manager, Gregoire P. Tournant, orchestrated the multi-year scheme to mislead investors who invested approximately $11 billion in Structured Alpha and paid the defendants over $550 million in fees.

Tournant, along with Trevor L. Taylor, the Co-Lead Portfolio Manager, and Stephen G. Bond-Nelson, the Portfolio Manager, are also alleged to have manipulated numerous financial reports and other information provided to investors to conceal the magnitude of Structured Alpha’s true risk and the funds’ actual performance.

“From at least January 2016 through March 2020, the defendants lied about nearly every aspect of a highly complex investment strategy they marketed to institutional investors, including pension funds managing the retirement savings of everyday Americans. While they were able to solicit over $11 billion in investments by the end of 2019 and earn over $550 million in fees as a result of their lies, they lost over $5 billion in investor funds when the market volatility of March 2020 exposed the true risk of their products. Following the crash of the Structured Alpha Funds, the defendants continued their pattern of deceit by lying to SEC staff, and their fraud would have gone undetected if it weren’t for the persistence of SEC lawyers who pieced together the full scope of the massive fraud,” Gurbir S. Grewal, the Director of the SEC’s Division of Enforcement, commented.

On Tuesday, the US Securities and Exchange Commission (SEC ) said that it had charged Allianz Global Investors US LLC (AGI US) and three former senior portfolio managers with multibillion-dollar securities fraud.

According to the press release, they were allegedly involved in a massive fraudulent scheme that concealed the ‘immense downside’ risks of a complex options trading strategy they called ‘Structured Alpha’. Around 114 institutional investors purchased the strategy from AGI US, including pension funds for teachers, clergy, bus drivers, engineers and other individuals. As a result of AGI US and the portfolio managers’ misconduct, billions of dollars were lost as a result of the COVID-19 market crash in March 2020.

In an integrated, global resolution, AGI US has agreed to pay billions of dollars, including $1 billion to settle SEC charges and over $5 billion in restitution to victims along with its parent company, Allianz SE.

Case Background

According to the SEC complaint, filed in federal court in Manhattan, Structured Alpha’s Lead Portfolio Manager, Gregoire P. Tournant, orchestrated the multi-year scheme to mislead investors who invested approximately $11 billion in Structured Alpha and paid the defendants over $550 million in fees.

Tournant, along with Trevor L. Taylor, the Co-Lead Portfolio Manager, and Stephen G. Bond-Nelson, the Portfolio Manager, are also alleged to have manipulated numerous financial reports and other information provided to investors to conceal the magnitude of Structured Alpha’s true risk and the funds’ actual performance.

“From at least January 2016 through March 2020, the defendants lied about nearly every aspect of a highly complex investment strategy they marketed to institutional investors, including pension funds managing the retirement savings of everyday Americans. While they were able to solicit over $11 billion in investments by the end of 2019 and earn over $550 million in fees as a result of their lies, they lost over $5 billion in investor funds when the market volatility of March 2020 exposed the true risk of their products. Following the crash of the Structured Alpha Funds, the defendants continued their pattern of deceit by lying to SEC staff, and their fraud would have gone undetected if it weren’t for the persistence of SEC lawyers who pieced together the full scope of the massive fraud,” Gurbir S. Grewal, the Director of the SEC’s Division of Enforcement, commented.

About the Author: Felipe Erazo
Felipe Erazo
  • 1036 Articles
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About the Author: Felipe Erazo
Felipe earned a degree in journalism at the University of Chile with the highest honour in the overall ranking, and he also holds a Bachelor of Arts in Social Communication. In addition, he has been working as a freelance writer and Forex/crypto analyst, with experience gained from several forex broker firms and crypto-related media outlets around the world. He has been involved in the world of online forex trading since 2010 and in the crypto sphere since 2015.
  • 1036 Articles
  • 43 Followers

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