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NEW YORK, Sept 30 (Reuters) – A U.S. decide stated Germany’s Allianz SE (ALVG.DE) should face investor claims it wrongly “abandoned” the funding methods it promised to make use of on hedge funds that suffered huge losses because the COVID-19 pandemic shook markets early final yr.
In an 81-page resolution, U.S. District Judge Katherine Polk Failla in Manhattan stated traders might attempt to present Allianz was negligent and lacked good religion in managing its Structured Alpha funds. She additionally dismissed some state law-based claims.
Thursday’s resolution addressed 12 lawsuits, together with two proposed class actions, by which traders claimed to endure greater than $4 billion of losses. The insurer faces greater than two dozen such lawsuits, searching for not less than $6 billion.
Allianz’s funds used advanced possibility methods to generate predictable returns with out extreme threat, however in line with the traders, imploded in February and March 2020 after quietly eradicating hedges designed to attenuate losses.
According to courtroom papers, the Structured Alpha Global Equity 500 fund misplaced three-quarters of its worth, lagging its benchmark by practically 60 share factors. Two different funds as soon as price $2.3 billion have been liquidated, locking in investor losses.
Failla stated the traders might attempt to present that Allianz breached phrases of a personal placement memorandum for the funds, which she stated the insurer portrayed as a “glorified advertising brochure, the substance of which [it] could ignore at will.”
Allianz and its legal professionals didn’t instantly reply to requests for remark. Lawyers for traders within the proposed class actions didn’t instantly reply to related requests.
On Thursday, Allianz stated its prime asset administration govt Jacqueline Hunt was leaving her day-to-day function, and introduced modifications to its board. learn extra
The modifications comply with Allianz’s Aug. 1 announcement that the U.S. Department of Justice was investigating the Structured Alpha funds.
That probe features a overview of whether or not Allianz fund managers misrepresented the funds’ dangers to traders, three individuals with information of the matter stated earlier in September. learn extra
Another U.S. regulator, the U.S. Securities and Exchange Commission, can be probing the funds’ collapse.
The instances embody In re Allianz Global Investors US LLC Alpha Series Litigation, U.S. District Court, Southern District of New York, No. 20-05615.