Allianz must face investor claims over funds’ collapse, US judge rules

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NEW YORK, Sept 30 (Businesshala) – A US judge said Germany’s Allianz SE (ALVG.DE) should face claims from investors that it wrongly “abandoned” the promise to use investment strategies on hedge funds. who have suffered massive losses in the form of the COVID-19 pandemic. The market shook at the beginning of last year.

US District Judge Katherine Polk Fala in Manhattan said in an 81-page ruling that investors can try to show that Allianz was reckless and lacked good faith in the management of its Structured Alpha Fund. It also rejected some state law-based claims.

Thursday’s ruling addressed 12 lawsuits, including two proposed class actions, in which investors claimed more than $4 billion in damages. The insurer faces more than two dozen such lawsuits seeking at least $6 billion.

Allianz’s funds used complex options strategies to generate predictable returns without excessive risk, but got stuck in February and March 2020 after quietly removing hedges designed to minimize losses, according to investors.

According to court papers, the Structured Alpha Global Equity 500 Fund lost three-quarters of its value, down nearly 60 percentage points from its benchmark. Two other funds, once valued at $2.3 billion, were liquidated, causing a loss to investors.

Fella said investors could try to show that Allianz violated the terms of a private placement memorandum for the fund, which he said the insurer portrayed as a “glorious advertising brochure” whose substance [it] Can ignore at will.”

Allianz and its lawyers did not immediately respond to requests for comment. Lawyers for investors in the proposed class actions did not immediately respond to similar requests.

On Thursday, Allianz said its top asset management executive Jacqueline Hunt was leaving her day-to-day role, and announced changes to its board.

The changes follow Allianz’s August 1 announcement that the US Department of Justice is investigating the Structured Alpha Fund.

That investigation includes a review of whether Allianz fund managers misrepresented the fund’s risks to investors, three people with knowledge of the matter said earlier in September.

Another US regulator, the US Securities and Exchange Commission, is also investigating the fund’s collapse.

These cases involve Allianz Global Investors US LLC Alpha Series Litigation, US District Court, Southern District of New York, No. 20-05615.

Reporting by Jonathan Stempel in New York; Editing by Cynthia Osterman

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