FRANKFURT – German regulators have launched an investigation into the country’s biggest financial company Allianz after the demise of some of its United States investment funds last year, people with direct knowledge of the matter told Reuters.
The move heightens the pressure on the insurer, which is already facing a slew of investor suits over its Structured Alpha Funds, and related investigations by the US Justice Department (DoJ) and Securities and Exchange Commission.
The German firm is one of the world’s biggest money managers, with €2.4 trillion (RM11.8 trillion) in assets under management through bond giant Pimco and Allianz Global Investors, which managed the funds at the centre of the probes.
The investigation by financial regulator BaFin spans multiple departments of the institution, said several sources speaking on condition of anonymity as the probe is ongoing.
BaFin officials are examining the extent to which Allianz executives outside the fund division had knowledge of, or were involved in, events leading up to the funds racking up billions of dollars in losses, said the insiders.
An Allianz spokesman declined to comment on the BaFin investigation.
The sources said the probe is currently in the fact-finding phase and involves multiple people, but has picked up pace since Allianz announced the DoJ investigation on August 1.
The insurer last month said it has reassessed the risks related to the funds after being approached by DoJ, and concluded that the matter could materially hit its future financial results.
The various investigations and suits revolve around Allianz Global Investor’s Structured Alpha Funds, which catered to US pension funds for workers such as teachers and subway employees. The funds were also marketed to European investors.
After the coronavirus pandemic sent markets into a tailspin, the funds plummeted, in some cases by 80% or more.
The losses from bad bets on options were so extreme that Allianz in March last year closed two funds that were worth US$2.3 billion (RM9.56 billion) at end-2019. Losses at others caused some investors to withdraw what was left of their money.
Investors have lodged 25 suits claiming US$6 billion in damages, saying Allianz strayed from its strategy of providing downside protection for market crashes. Allianz’s lawyers have said the investors are sophisticated and were aware of the risks. – Reuters, September 7, 2021
