Allianz fires two managers in wake of investment fund collapse

(Reuters) — Allianz has dismissed two asset managers who oversaw a group of investment funds that collapsed after racking up massive losses when the spread of coronavirus triggered wild market swings, according to regulatory filings.

The downfall of the $15 billion Structured Alpha funds has landed the German insurance company in hot water with the U.S. Department of Justice and Securities and Exchange Commission, which are both investigating what went wrong.

The funds were run by portfolio manager Greg Tournant, who had been with Allianz Global Investors since 2002, according to a profile that used to be on Allianz’s website.

“(Mr. Tournant) was discharged for violation of firm policies designed to ensure compliance with industry regulations and standards relating to the preparation and provision of client communications,” according to a filing on Dec. 13 by the U.S. Financial Industry Regulatory Authority.

Reuters reported in October that the DOJ was looking into possible misconduct by managers of the Structured Alpha funds and the misrepresentation of risk to investors. Mr. Tournant did not immediately respond to a LinkedIn message seeking comment and has not responded to multiple previous efforts by Reuters to contact him. Allianz declined to comment.

A second Allianz employee, Stephen Bond-Nelson, was “discharged for violation of firm compliance policies,” according to a separate filing. Reuters was unable to reach Mr. Bond-Nelson for comment.

Investors in the funds, which were predominantly U.S. public pension funds, have sued Allianz for a total of $6 billion in damages, though settlements have now been reached with some.

The Allianz funds used complex options strategies to generate returns but when the coronavirus pandemic sent stock markets into a tailspin in February and March 2020, they plummeted in value, in some cases by 80% or more.

In their lawsuits, investors alleged Allianz had strayed from its stated investment strategy of hedging to limit potential losses.

The funds catered in particular to normally conservative U.S. pension funds, including those for laborers in Alaska, teachers in Arkansas and subway workers in New York.

Last week, Allianz announced a €3.7 billion ($4.2 billion) provision to deal with the fallout, pushing the company into a fourth-quarter loss and resulting in a cut in pay for its CEO and other board members.

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