SGT filed the first class action and second action in the country seeking to recover losses on behalf of investors in a series of hedge funds managed by Allianz Global Investors U.S. LLC, a US-based asset management company owned by the German insurance giant Allianz SE.
The AllianzGI “Structured Alpha” hedge funds were supposed to return several percentage points of “alpha”—or returns uncorrelated to broader market movements—via a “market neutral” complex options trading strategy. A key feature of the advertised strategy was a hedging strategy which AllianzGI represented would result in the funds maintaining hedges 10-15% out of the money so that the funds would remain protected against rapid market downturns. Additional advertised features were robust risk management and compliance procedures.
However, the market turmoil of February and March 2020 exposed that AllianzGI did not maintain any hedges which would effectively protect the funds against the 10-15% market downturn as advertised, nor did AllianzGI conduct anything close to adequate risk management or compliance procedures in overseeing the Structured Alpha hedge funds. Instead, AllianzGI allowed a group of employees to operate without any oversight, resulting in an unchecked fraud that when undiscovered for decades.
Over 15 actions were consolidated for pretrial purposes before United States District Court Judge Katharine Polk Failla of the Southern District of New York. On September 30, 2021, Judge Failla issued an opinion denying in substantial part Allianz's motion to dismiss. In April 2022 SGT’s clients settled their claims on individuals bases on confidential terms.
After the last of the hedge fund-related actions against AllianzGI concluded, the DOJ and SEC announced criminal and civil charges against AllianzGI US as three employees: Gregoire Tournant, Trevor Taylor, and Stephen Bond-Nelson. Taylor and Bond-Nelson are cooperating and pleaded guilty earlier in 2022. Tournant has pleaded not guilty.
SGT clients’ actions were: Retirement Program for Employees of the Town of Fairfield, et al v. Allianz Global Investors U.S. LLC, No. 20-cv-5817, and In re AllianzGI Structured Alpha class Action Litigation, No. 20-cv-07154, filed in the United States District Court for the Southern District of New York.