Allianz U.S. Unit Ordered to Pay $6B in Securities Fraud Case

Gregoire Tournant, the former chief investment officer and co-lead portfolio manager of the funds, was charged with fraud and conspiracy in connection with the funds’ meltdown. He has pleaded not guilty and is fighting the charges.

Two other executives with the funds, Stephen Bond-Nelson and Trevor Taylor, pleaded guilty to conspiracy and fraud last year and are cooperating with prosecutors.

In the July 5 letter, both sides agreed that AGI did not voluntarily disclose the alleged misconduct to the government but has since cooperated with its investigation.

AGI U.S.’s Structured Alpha funds were marketed as providing protection against a market crash. Instead, they ended up losing $7 billion during the tumultuous early days of the pandemic in 2020, spurring multiple lawsuits from pension plan investors.

Under the sentence, AGI was ordered to pay fines of $2.3 billion, $3.2 billion in restitution and to forfeit $463 million. It will receive credit for $1.9 billion already made over to victims of the fraud and for a $675 million civil penalty paid to the U.S. Securities and Exchange Commission.

As the judge read through all the payment numbers, down to the cent, she added a $400 mandatory court assessment that is required when a corporation pleads guilty to a felony.

“That’s smaller than a rounding error in this particular case,” McMahon remarked.

The case is U.S. v. Allianz Global Investors US, 22-cr-00279, US District Court, Southern District of New York (Manhattan).

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