Allianz insurance will pay a colossal fine in the United States

Huge fine for Allianz. The policeman of the American Stock Exchange, the SEC, announced on Tuesday May 17 that the insurance giant had agreed to pay approximately one billion dollars to the authorities to settle a dispute relating to fraudulent practices by its investment management subsidiary. Along with parent company Allianz SE, Allianz Global Investors, which pleaded guilty to the SEC charges, will also pay more than $5 billion in compensation to victims of the fraud. The sum paid to the government includes a fine of $675 million for the SEC and $174.3 million for the Department of Justice, according to Allianz. The German group indicated last week that it had spent an additional provision of 1.9 billion euros, in addition to that of 3.7 billion already announced, to settle this dispute.

The SEC accused the asset manager of hiding from investors the downside risks on complex financial products, managed within a fund called “Structured Alpha”, which counted up to $11 billion of assets. Fund officials had sought to disguise the extent of potential losses by tampering with the figures communicated to investors in the event of a stock market crash. Billions of dollars had evaporated in March 2020 when the stock markets crashed due to the Covid-19 crisis. The SEC believes that Allianz Global Investors continued to mislead investors and regulators by giving false testimony and by arranging secret meetings to consider the transfer of their assets abroad.

Many victims

“There are among the victims of this misconduct teachers, church people, bus drivers and engineers, whose pensions have been invested in institutional funds in order to support their retirement”, declared the boss of SEC quoted Gary Gensler in a statement. “This case demonstrates once again that even the most seasoned institutional investors, such as pension funds, can be the victims of wrongdoing,” added Gary Gensler. Criminal proceedings are still under way against three former managers of the asset manager.

Another consequence of the SEC complaint, Allianz Global Investors will no longer be able to provide advisory services to US-registered investment funds within the next 10 years and will have to withdraw from the funds it currently advises. current. Contacted by AFP, Allianz confirmed that it had settled its dispute with the SEC as well as with the US Department of Justice. “These settlements bring an end to Allianz’s US government investigations into the Structured Alpha case,” the group said. The insurer also said it hoped that the SEC would publish exemptions so that the activities of its bond fund PIMCO and its subsidiary Allianz Life in the United States would not be affected.

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