Legal

US Department Of Justice Probes Allianz Over Funds Losses - Report

Tom Burroughes, Group Editor, London, 14 September 2021

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The German firm faces at least 25 investor law suits, including those filed by a number of US institutional investors.    

The US Department of Justice is reportedly probing funds run by German insurer and asset manager Allianz that used complex options strategies to make money but incurred big losses when the pandemic prompted huge stock market gyrations in February and March 2020. 

At least 25 investor lawsuits, predominantly by US public pension funds, have been filed against Allianz for a total of about $6 billion in damages, Reuters reported. The US Department of Justice investigation into Allianz is looking at possible misconduct by fund managers and misrepresentation of risk to investors, the newswire said, citing unnamed sources.

Allianz declined to comment to WealthBriefing on the matter yesterday.

Allianz disclosed the probe on 1 August, referring to the “Structured Alpha Funds.” The US Securities and Exchange Commission launched a probe last year. The statement said: “Allianz Global Investors US LLC has received a voluntary request for documents and information from the DOJ. Allianz is fully cooperating with the SEC and the DOJ in the investigations and has immediately started its own review of this matter.”

The firm said it has not yet made a provision for any potential costs associated with court proceedings and investigations, as the outcome or timing was unknown.

The Reuters story said that the DOJ is examining whether managers at Allianz Global Investor’s Structured Alpha Funds abandoned a strategy to protect against market crashes and how they communicated the amount of risk to investors.

The newswire said that the DOJ and Allianz declined to comment on the nature of the investigation, which could lead to criminal charges.

The Arkansas Teacher Retirement System filed a lawsuit in July 2020 seeking $774 million in damages. The report said that other pension funds involved in suits include those of New York subway workers and city of Milwaukee employees.

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