Explainer: Allianz has fired two managers following the failure of an investment fund
According to regulatory documents, Allianz (ALVG.DE) has Allianz has fired two managers following the failure of an investment fund that collapsed after racking up enormous losses due to the outbreak of coronavirus, which generated dramatic market swings.
The collapse of the $15 billion Structured Alpha funds has left the German insurance business in serious water with the US Department of Justice (DOJ) and the Securities and Exchange Commission, all of which are looking into what went wrong.
According to a profile that used to be on Allianz’s website, the funds were managed by portfolio manager Greg Tournant, who had been with the firm since 2002.
According to a filing by the US Financial Industry Regulatory Authority on Dec. 13, “(Tournant) was discharged for violation of firm policies meant to maintain compliance with industry norms and standards relating to the preparation and provision of client communications.”
According to Reuters, the Department of Justice is investigating suspected misconduct by Structured Alpha fund managers and risk misrepresentation to investors.
Tournant did not respond to a LinkedIn message seeking comment, and he has ignored several attempts by Reuters to contact him in the past. Allianz did not respond to a request for comment.
According to a separate petition, a second Allianz employee, Stephen Bond-Nelson, was “discharged for violation of business compliance norms.” Bond-Nelson could not be reached for comment by Reuters.
Investors in the funds, which were mostly public pension funds in the United States, sued Allianz for a total of $6 billion in damages, while some have reached settlements.
The Allianz funds used complex options methods to create gains, but when the coronavirus epidemic wreaked havoc on global markets in February and March 2020, their value plunged by as much as 80% or more.
Investors claimed that Allianz had deviated from its declared investing strategy of hedging to limit potential losses in their claims.
The funds catered to traditionally conservative US pension funds, such as those for Alaskan laborers, Arkansas teachers, and New York subway workers.
Allianz disclosed a 3.7 billion euro ($4.2 billion) provision for the repercussions last week, putting the company into a fourth-quarter loss and leading in salary cuts for its CEO and other board members. find out more
Tournant compared Structured Alpha’s strategy to insurance in a 2016 video obtained by Reuters.
“Our plans aren’t like race cars that want to get to the finish line as quickly as possible. They’re off-road cars with four-wheel drive that can handle tough terrain “In different marketing materials, he stated.Read more on Reuters