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February 16, 2022
As reported by Emilie Ruscoe of Law360, Scott + Scott Attorneys at Law LLP and Silver Golub & Teitell LLP have been appointed as co-class counsel to represent a consolidated class of investors who are suing Allianz Global Investors for allegedly failing to protect certain investment funds from "catastrophic loss" during the early days of the COVID-19 pandemic. U.S. District Judge Katherine Polk Failla recently combined two actions against Allianz Global and named the two firms as interim co-lead counsel for the proposed class.
Scott + Scott had previously represented six investors, including four pension funds, while Silver Golub & Teitell represented four institutional investors who made similar claims against Allianz Global. The 10 investors who are now part of the consolidated class action are among several entities that are suing the Allianz unit over the early pandemic performance of the funds among the company's "Structured Alpha" hedge funds. Allianz Global is facing over a dozen lawsuits filed by entities including an individual investor, a financial consulting group, and Lehigh University.
The investors filed their claims against Allianz Global, saying that they did so due to the "evaporation, almost overnight, of over a billion dollars of its investors' money." The investors allege that Allianz Global marketed the three funds at issue as designed to outperform specific indexes "whether equity markets are up or down, smooth or volatile." The company even claimed that it would use sophisticated hedging strategies to protect the funds' assets if there were a market crash.
However, when the pandemic upended the markets, the investors claim that Allianz Global departed from its normal rules for the funds and "recklessly 'rolled the dice'" in the hope that adverse market trends would quickly reverse course before the Alpha funds would have to recognize devastating losses. As a result, the investors claim that the funds saw losses as great as 75% in one case, and Allianz Global later liquidated the funds.
In June, the Judicial Panel on Multidistrict Litigation declined to consolidate the cases against Allianz Global, shooting down a San Diego-based pension fund's request to combine the suit it had pending in federal court in Southern California with the suits in New York.
Following the consolidation order, Judge Failla has tasked the newly formed class action legal team with coordinating with the plaintiffs in the other suits "as contemplated by the court's prior case management orders covering this action and various related non-class actions."
The investors in the consolidated class action are represented by William C. Fredericks, Donald M. Broggi, and Zachary M. Vaughan of Scott + Scott Attorneys at Law LLP, and David S. Golub, Steven L. Bloch, and Ian W. Sloss of Silver Golub & Teitell LLP. Allianz Global is represented by Robert J. Giuffra Jr., Stephanie G. Wheeler, Kathleen Suzanne McArthur, Ann-Elizabeth Ostrager, and Hilary M. Williams of Sullivan & Cromwell LLP, and Robert A. Skinner, Amy D. Roy, Mary Elizabeth Brust, and Cole A. Goodman of Ropes & Gray LLP.
The case is In re: AllianzGI Structured Alpha Class Action Litigation, No. 1:20-cv-07154 and is pending before Judge Failla in the U.S. District Court for the Southern District of New York.
Law360's reporting can be read here: 2 Firms To Rep Investors Of Allianz Funds Rocked By COVID.