Lead fund manager involved in Allianz fraud case admits guilt

The lead manager in a funds scandal that rocked Allianz, one of the world’s largest insurance groups, has pleaded guilty to investment adviser fraud, leading to a $6 billion settlement with US authorities. Gregoire Tournant, the former lead manager of a set of funds at Allianz Global Investors, admitted to two counts of investment adviser fraud, each carrying a maximum sentence of five years in prison.

The scandal, which involved marketing the funds as able to withstand a market crash but ultimately resulting in heavy losses during the 2020 pandemic sell-off, raised doubts about Allianz’s control functions and triggered an apology from its chief executive. Tournant and two other managers were accused of lying to investors, exposing them to risk, and altering risk reports.

Authorities alleged that Tournant understated the true risks taken by the funds and overstated the level of oversight, even going as far as altering risk reports to deceive investors. The US Department of Justice investigation found significant gaps and weaknesses in the funds’ controls, but did not find evidence that anyone outside of the structured-products group was aware of the misconduct.

As part of the settlement, Tournant agreed to forfeit approximately $17 million in paid and deferred compensation. He is scheduled to be sentenced in October. The scandal also led Allianz to warn on profits in 2021 as regulators probed the matter, with the insurer’s chief executive expressing deep regret over the impact on investors.

A lawyer for Tournant declined to comment, while Allianz also refrained from making a statement on the matter. The guilty plea marks the culmination of a multiyear investigation and prosecution that aimed to hold wrongdoers accountable and make victims whole.