Allianz must face investor claims over funds’ collapse, US judge rules

NEW YORK, Sept 30 (Reuters) – A U.S. decide stated Germany’s Allianz SE should face investor claims it wrongly “deserted” 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 12 months.
In an 81-page resolution, U.S. District Choose Katherine Polk Failla in Manhattan stated buyers may 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 buyers claimed to endure greater than $4 billion of losses. The insurer faces greater than two dozen such lawsuits, searching for a minimum of $6 billion.
Allianz’s funds used complicated choice methods to generate predictable returns with out extreme threat, however in response to the buyers, imploded in February and March 2020 after quietly eradicating hedges designed to attenuate losses.
In response to court docket papers, the Structured Alpha International Fairness 500 fund misplaced three-quarters of its worth, lagging its benchmark by practically 60 share factors. Two different funds as soon as value $2.3 billion have been liquidated, locking in investor losses.
Failla stated the buyers may attempt to present that Allianz breached phrases of a personal placement memorandum for the funds, which she stated the insurer portrayed as a “glorified promoting brochure, the substance of which [it] may ignore at will.”
Allianz and its attorneys didn’t instantly reply to requests for remark. Legal professionals for buyers within the proposed class actions didn’t instantly reply to related requests.
On Thursday, Allianz stated its high asset administration govt Jacqueline Hunt was leaving her day-to-day position, and introduced adjustments to its board.
The adjustments observe Allianz’s Aug. 1 announcement that the U.S. Division of Justice was investigating the Structured Alpha funds.
That probe features a evaluation of whether or not Allianz fund managers misrepresented the funds’ dangers to buyers, three folks with information of the matter stated earlier in September.
One other U.S. regulator, the U.S. Securities and Trade Fee, can also be probing the funds’ collapse.
The circumstances embrace In re Allianz International Buyers US LLC Alpha Collection Litigation, U.S. District Court docket, Southern District of New York, No. 20-05615.
Reporting by Jonathan Stempel in New York; Enhancing by Cynthia Osterman