FRANKFURT – Germany’s Allianz has agreed to pay about $6 billion and its U.S. asset management unit will plead guilty to fraud after a group of its multibillion investment funds collapsed amid market turmoil triggered by the coronavirus pandemic in 2020.
Here is timeline of key events in the saga, based on court documents, corporate disclosures, archived websites, public statements, and minutes of investor meetings:
2005
Allianz’s U.S. asset management arm establishes the so-called Structured Alpha funds under manager Greg Tournant.
2007
Arkansas’ pension fund for retired teachers – which would later be the first to sue Allianz over its investments in the funds – owns $19.4 million in Allianz stock, its fourth-largest holding in a foreign company.
2008
The Arkansas’ pension fund makes an initial investment in Allianz’s Structured Alpha funds.
2013-2016
Arkansas decides to build up its investment in the Allianz funds. The funds also attracted pension funds that served labourers in Alaska and subway workers in New York.
2016
Marketing material describes the funds as “a tested & proven solution” and “consistently above target”. They are marketed as “a confident strategy with an insurance spirit”.
2019
Arkansas’ Structured Alpha holdings reach a market value of $1.6 billion at the end of 2019, a significant portion of the $18.3 billion fund.
2020
January – Global stock markets plunge amid fears of the spreading coronavirus.
Feb. 3 – Mohamed El-Erian, Chief Economic Advisor at Allianz, warns CNBC viewers not “to buy the dip” because the coronavirus crisis was without precedent.
March 13 – The investment consultant Aon warns Structured Alpha investors in a “flash report” that it put the Structured Alpha funds on review.
March 25 – Allianz announces the liquidation of two hard-hit funds. Investors are also told chief fund manager Tournant had been ill for weeks, according to lawsuits.
March 27 – Allianz says it remains committed to the fund franchise and “the remaining funds are now well positioned”, but Aon issues another report recommending a “sell”.
March 31 – One of the funds held by Arkansas loses 78% in the first quarter, compared to a 22% drop of its benchmark.
April 6 – The Arkansas fund’s board votes to exit the Allianz funds and park the proceeds with BlackRock.
June 30 – The Arkansas fund’s board votes to sue Allianz.
July 20 – Arkansas’ suit is filed with the U.S. Southern District of New York claiming $774 million in losses.
July 21 Allianz publishes a paper saying that “losses were not the result of any failure in the portfolio’s investment strategy or risk management processes”. It has since been removed from the web.
Aug. 4 – Allianz discloses that the SEC is investigating.
September – Numerous other investors had by this point filed suits similar to Arkansas’, and more followed.
2021
May – The U.S. Department of Justice approaches Allianz for information on the funds.
Aug. 1 Allianz publicly discloses the DOJ investigation and says it could take a financial hit.
Aug. 2 – Allianz shares drop 7.8%.
Aug. 7 Oliver Baete, Allianz chief executive officer describes a “horrible week” and concedes “not everything was perfect in the fund management.”
Sept. 10 – Reuters reports that the DOJ was looking at possible misconduct by fund managers and misrepresentation of risk to investors.
2022
Feb. 17 – Allianz says it will set aside 3.7 billion euros ($3.90 billion) to deal with investigations and lawsuits. Reports 2021 profit was the lowest since 2013.
Feb. 18 – Allianz announces bonus cuts for its CEO and board, and a settlement with a “vast majority” of investors.
Feb. 28 – A number of big investors file to end their lawsuits.
March 3 – Arkansas drops its lawsuit after settling for $642 million, according to a court document and board meeting minutes.
March 4 – Allianz’s annual report discloses that Allianz Chief Executive Oliver Baete earned 9% more in 2021 despite a cut in his bonus for the funds saga.
May 11 – Allianz sets aside another 1.9 billion euros to settle litigation and any fines from U.S. regulators. nL5N2X327P]
MAY 17 – The DOJ announces Allianz has agreed to pay about $6 billion and its U.S. asset management unit will plead guilty to fraud.
($1 = 0.9496 euros)
(Reporting by Tom Sims; Editing by Tomasz Janowski)
