USA impose severe fines on Allianz - allegations of fraud
Created: 05/17/2022Updated: 05/17/2022 7:24 p.m
A flag with the logo and lettering of Allianz in Munich: The insurance group has concluded a billion-euro settlement because of a legal dispute with major investors in the United States.
© Alexander Heinl/dpa
In the spring of 2020, major Allianz customers in the USA filed lawsuits worth billions due to high fund losses.
According to US authorities, asset management employees in the USA acted criminally.
New York/Munich - The US government is imposing a tough fine on Allianz after fund losses in the billions due to allegations of fraud.
The Munich group has to pay a fine of at least three-digit millions, and Allianz Global Investors, the responsible asset manager, is no longer allowed to continue its US business in the previous form.
For this reason, the US company of AGI in the USA will transfer its business there with around 120 billion dollars in customer funds to a "new US partner", as Allianz announced in Munich on Tuesday.
According to the SEC, large US investors lost five billion dollars with AGI funds in March 2020 and then filed billions in lawsuits against Allianz.
The SEC announced that it was holding Allianz-owned asset manager AGI and the three accused managers responsible for a "massive fraud scheme."
The US Department of Justice raised parallel allegations: Deputy Attorney General Lisa Monaco spoke of a "sophisticated Wall Street plan that cost the victims billions of dollars".
How much is the fine?
There was confusion about the amount of the fine: the Department of Justice named a fine of $2.3 billion in its statement.
The Securities and Exchange Commission also stated that Allianz was paying more than one billion dollars to the authority to clarify the allegations.
Allianz itself, however, spoke of a fine of 675 million dollars to the SEC, with a further 174.3 million going to the US Department of Justice as “profit skimming”.
According to Allianz, these sums are the net payments.
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According to the company, the penalties to the US authorities will not entail any further financial burdens for the Dax group.
Because Allianz had already set aside 5.6 billion euros, most of it for comparisons with the injured investors.
According to the Department of Justice, this includes several pension finds, including for bus drivers and employees of the New York subway as well as for teachers in the state of Arkansas.
Apparently deliberate deception
The SEC assumes that the three accused managers deceived both a good 114 customers and the supervisory authority over a number of years about the true risks of the so-called structured alpha funds.
In its statement, the Munich head office admitted criminal misconduct by a few AGI employees who are no longer employed by the group.
According to US authorities, the three managers have admitted their guilt.
The customers had sued AGI 2020.
The company initially denied the allegations.
But the US authorities classify the losses as a criminal case.
Allianz is one of the largest asset managers in the world, customers have entrusted almost 2 trillion euros to the two subsidiaries AGI and Pimco.
AGI is the smaller of the two companies, while the US company Pimco is much larger, although it was not involved in the losses or in the legal disputes that followed.
The alliance left open who the new US partner of AGI should be.
AGI is to take a stake in the new unit, and there is also to be mutual cooperation in international sales.