Fund manager faces 40 years in prison after using Allianz’ good name to defraud investors
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The star portfolio manager behind Allianz’ Structured Alpha funds faces decades in prison after he traded off Allianz’ good reputation to defraud investors of billions, US prosecutors have said.
French-American citizen Gregoire Tournant earned $60m from his role as Chief Investment Officer at Allianz, as he lied to investors and misled them as to the risk of investing in the Structured Alpha funds.
The 55-year-old investment manager now faces up to 40 years in prison on five separate counts of fraud and conspiracy to obstruct justice.
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.
The comments come after Allianz’s $11bn Structured Alpha funds racked up $6bn in losses at the start of the pandemic, as its risky options strategy faltered in the face of stock market volatility at the start of Covid-19.
More than 100 institutional investors, including pension funds for teachers in Arkansas, labourers in Alaska, and bus drivers in New York City, lost billions after investing in the funds, after Tournant and his so-conspirators altered figures to downplay the risk involved.
Two other Allianz execs pleaded guilty to playing a part in the scheme and are now cooperating with the government’s investigation.
Miami resident Trevor Taylor, 49, now faces 30 years in prison after pleading guilty to three counts of fraud and conspiracy to commit fraud, while New Jersey resident Stephen Bond-Nelson faces 35 years after submitting a guilty plea on four counts including conspiracy to obstruct justice.
The allegations come after Allianz agreed to a pay $6bn to investors and US regulators over the collapse of the Structured Alpha funds.
Tournant lawyers said: “We have faith that the justice system will reject this meritless and ill-considered attempt by the government to criminalize the impact of the unprecedented, COVID-induced market dislocation of March 2020.”
“Greg Tournant has been unfairly targeted despite the fact that he was on extended medical leave during these market events, and the funds had thrived under his leadership for the previous 14 years.”
“The losses resulting from these market events were suffered by sophisticated institutional investors – including Greg himself who had a considerable investment in the fund. While the losses are regrettable, they are not the result of any crime.”
“The Government’s attempt to characterize them as such is not only unfairly damaging to Greg’s reputation and livelihood, but extremely dangerous to the market as a whole. Greg looks forward to vigorously defending himself in Court against these charges.”