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Allianz Announces $6 Bln Settlement With DOJ Over Fund Losses

Financial services company Allianz SE (ALIZY) said on Tuesday that its indirect subsidiary Allianz Global Investors US LLC or AGI US entered into settlements with the US Department of Justice and the Securities and Exchange Commission or SEC in connection with the Structured Alpha matter.

The massive fraud happened when AGI US hid from investors the huge risks involved in a complex options trading strategy known as "Structured Alpha." The SEC on Tuesday charged AGI US and three former senior portfolio managers for selling the strategy to around 114 institutional investors, including pension funds for teachers, clergy, bus drivers, engineers, and many other individuals. After the COVID-19 market crash of March 2020 brought to light the fraudulent scheme, the strategy lost many dollars as a result of AGI US and the portfolio managers' misconduct.

AGI US has agreed upon to pay billions of dollars as part of an integrated, global resolution. This includes more than $1 billion to settle SEC charges and along with its parent, Allianz SE, over $5 billion in restitution to victims.

Following the Department of Justice resolution, AGI US said that it would plead guilty to one count of criminal securities fraud, and the SEC resolution establishes that AGI US has violated relevant US securities laws.

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