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Alternative Market Briefing

Allianz Global Investors US charged with fraud, to pay $6bn

Wednesday, May 18, 2022

B. G., Opalesque Geneva:

The US Securities and Exchange Commission (SEC) has charged Allianz Global Investors U.S. LLC (AGI US) and three former portfolio managers with fraud. The Commission describes it as "a massive fraudulent scheme that concealed the immense downside risks of a complex options trading strategy they called Structured Alpha." After the COVID-19 market crash of March 2020 exposed the fraudulent scheme, the strategy lost billions of dollars.

AGI US marketed and sold the strategy to approximately 114 institutional investors, including pension funds for teachers, clergy, bus drivers, engineers, and other individuals.

AGI US has agreed to pay billions of dollars as part of an integrated, global resolution, including more than $1bn to settle SEC charges and together with its parent, Allianz SE, over $5bn in restitution to victims.

The firm defrauded investors over several years - from 2014 to March 2020 - by concealing losses and the downside risks of the strategy and failing to implement risk controls.

Structured Alpha's lead portfolio manager Gregoire Tournant allegedly orchestrated the multi-year scheme to mislead investors who invested approximately $11bn in Structured Alpha and paid the defendants over $550m in fees. Together with co-lead portfolio manager Trevor Taylor and portfolio manager Stephen Bond-Nel......................

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