US SEC Charges Allianz Global Investors with Multibillion-Dollar Fraud

On Tuesday, the US Securities and Exchange Commission (SEC Securities and Exchange Commission (SEC) The Securities and Exchange Commission (SEC) is one of the most widely known independent authorities in the United States. The SEC has a wide range of responsibilities, helping police markets and curbing against abuse. This includes enforcing federal securities laws, proposing securities rules, and regulating the US’ stock and options exchanges.As one of the paramount regulatory authorities in the US, the SEC is responsible for the oversight of public companies in the aforementioned segments.Wha The Securities and Exchange Commission (SEC) is one of the most widely known independent authorities in the United States. The SEC has a wide range of responsibilities, helping police markets and curbing against abuse. This includes enforcing federal securities laws, proposing securities rules, and regulating the US’ stock and options exchanges.As one of the paramount regulatory authorities in the US, the SEC is responsible for the oversight of public companies in the aforementioned segments.Wha Read this Term) 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 Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, or stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Trad In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, or stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Trad Read this Term 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.