Both are cooperating with the government. Regulators said the misconduct included when Tournant and Bond-Nelson altered more than 75 risk reports before sending them to investors. Postal Inspection Service also announced today a plea agreement (the agreement) pursuant to which AGI will plead guilty to securities fraud in connection with this fraudulent scheme, and pay more than $3 billion in restitution to the victims of this fraud, pay a criminal fine of approximately $2.3 billion, and forfeit approximately $463 million to the government. More than 100 institutional investors, representing more than 100,000 individuals, were victims of this scheme. Listen to free podcasts to get the info you need to solve business challenges! He earned a grade of A+, which is not easy in my class. Megan Tackett is the editor for the Aspen Daily News. But when the pandemic hit, everything went haywire. A dual U.S.-French citizen, he arrived at Allianz Global Investors in the early 2000s by way of Oppenheimer Capital. Lead defendant in national fraud case has ties to Basalt, Roaring Fork Valley, And its far from the only time the defendants. 78j(b) & 78ff (Count Two), Gregoire Tournant, Chief Investment Officer of Allianz Global Investors U.S.s Structured Products Group, and Two Others Charged with Fraud Offenses, Securities, Commodities, & Investment Fraud. Investors have also filed more than two dozen lawsuits against Allianz over the Structured Alpha funds. Bond-Nelson pled guilty pursuant to an information before U.S. District Judge Paul A. Engelmayer on March 3. Allianz, which has denied wrongdoing, said earlier this month that independent advisers its hired to dig into what happened have thus far found no breaches of duty by the insurers management board. In the finger-pointing that followed, some big investors accused the professional consultants they had hired to vet Structured Alpha of ignoring red flags and failing to understand what the funds were doing, according to lawsuits. Attorneys Margaret Graham, Gina Castellano, Nicholas Folly and Richard Cooper are in charge of the prosecution. The board alleged that when the pandemic started fueling wild volatility in February, Structured Alpha made a fateful bet against further market declines. I previously warned that the Department of Justice would crack down on corporate crime, without regard to size, salary or other privilege, said Deputy Attorney General Lisa O. Monaco. 276 (LTS), Conspiracy to commit securities fraud, investment adviser fraud, and wire, 18 U.S.C. The allegations come after Allianz agreed to a pay $6bn to investors and US regulators over the collapse of the Structured Alpha funds. The committee claimed Aon touted Structured Alpha as late as 2019 as one of its "highest conviction strategies," even as it failed to properly monitor the Allianz funds or find fraud under its nose. While Mr Tournants funds might have sounded too good to be true, Allianz Global Investors US assured clients that its risk-management system had three lines of defence. Please tell us what you liked about it. read more. STAY CONNECTED Allianz, which has denied wrongdoing, said earlier this month that independent advisers its hired to dig into what happened have thus far found no breaches of duty by the insurers management board. filed with the Department of Justice which did not return an inquiry for comment by presstime Tuesday the U.S. subsidiary of the Germany-headquartered Allianz SE (among the worlds largest financial-advisory and insurance companies) essentially cost mostly American investors more than $5 billion in March 2020. It all came crashing down in the early, panicked days of Covid-19, when wild market swings upended an options strategy that was marketed as aiming to generate alpha regardless of market waves.. No risk or compliance personnel at AGI verified, attempted to verify or were responsible for verifying that Tournant and his colleagues were purchasing hedging positions within the range that was represented to investors. The case has been assigned to U.S. District Judge Colleen McMahon. "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 werent for the persistence of SEC lawyers who pieced together the full scope of the massive fraud.". At the same time, the firm has argued that its clients were sophisticated investors who knew what they were getting into. Please tell us what we can do to improve this article. Once with more than $11 billion of assets under management, the Structured Alpha funds lost more than $7 billion as COVID-19 roiled markets in February and March 2020. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); Grocery Chain Accuses Chubb of Lowballing, Fla. 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Access unmatched financial data, news and content in a highly-customised workflow experience on desktop, web and mobile. Valuation, Fundamentals, Momentum: The Case for Mid-Cap Value Stocks, Bond Fund Yields: What Investors Need to Know, How to Build Your Ultimate Marketing Plan. It turns out that Tournant and other fund managers behind Structured Alpha including longtime colleague Trevor Taylor previously ran into trouble during the 2008 financial crisis, with strategies that also involved options. At the same time, the firm has argued that its clients were sophisticated investors who knew what they were getting into. 2735 0 obj The funds also attracted pension funds that served laborers in Alaska and subway workers in New York. The cooperation of Mr Taylor and Mr Bond-Nelson was not assured. March 13 The investment consultant Aon warns Structured Alpha investors in a flash report that it put the Structured Alpha funds on review. Gregoire Tournant, the former chief investment officer who created the now-defunct Structured Alpha Funds, accused the law firm Sullivan & Cromwell of helping Allianz, also a client, make him. I would enthusiastically recommend him for any computer engineering position." In the complaint, the SEC describes Tournant as a resident of Miami, Florida except he also is a resident of Basalt, per reports in the Washington Post and The (Colorado Springs) Gazette. In early March of 2020, as he was grappling with the pandemics effect on his funds, Tournant went on medical leave for undisclosed reasons, the person said. Todays actions are further evidence that this office is not asleep on the beat and that with our law enforcement partners we will act swiftly to protect investors and bring white collar criminals to justice., These individuals working under the name of Allianz Global Investors, an international management firm, allegedly took advantage of its global recognition when they devised a scheme to mislead investors leading to the loss of billions of dollars, said Inspector-in-Charge Daniel B. Brubaker of the New York Office of the U.S. Feb. 17 Allianz says it will set aside 3.7 billion euros ($3.90 billion) to deal with investigations and lawsuits. May 11 Allianz sets aside another 1.9 billion euros to settle litigation and any fines from U.S. regulators. Prosecutors said the parent company played no role in the fraud and learnt of it only after the pandemic hit. Disaster struck in 2008 when the collapse of Lehman Brothers rocked global finance, freezing up markets and with them, Innovative Options trades. 6LinkedIn 8 Email Updates. Prosecutors say that although Mr Tournant assured big investors safety was his top priority, he secretly took huge, undisclosed risks. At a news conference, U.S. Attorney Damian Williams in Manhattan said more than 100,000 investors were harmed, and that while American prosecutors rarely bring criminal charges against companies it was "the right thing to do. Allianz Global Investors also failed to keep watch over Tournant, the New York prosecutors said, as they claimed the firm was asleep on the beat while the fund manager and his co-conspirators lined their own pockets by misleading pension funds. Secure .gov websites use HTTPS L@IW$',Bt^[J[>}+$"j|\,/cmhyqyRdY'yD,1. R&qr`$."Eb+[#iw}|`9 pT(G!t'm Investors are also told chief fund manager Tournant had been ill for weeks, according to lawsuits. Other corporations should take note that the results here are driven in part by the fact that this company failed to self-report their crimes. An official website of the United States government. Allianz is one of the worlds largest financial services companies and one of the worlds largest insurance companies. MAY 17 The DOJ announces Allianz has agreed to pay about $6 billion and its U.S. asset management unit will plead guilty to fraud. He was arrested in Colorado though not by local authorities, according to officials from the Pitkin County Sheriffs Office, Aspen Police Department and Basalt Police Department and subsequently released on $20 million bond, per reporting from, We have faith that the justice system will reject this meritless and ill-considered attemptby the governmentto criminalize the impact of theunprecedented,COVID-. 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