Allianz ex-manager must face US fraud charges related to $7 bln investor loss

Voya Financial

04/08/2023 21:23

By Jonathan Stempel
       NEW YORK, Aug 4 (Reuters) - A U.S. judge has rejected
former Allianz  ALVG.DE  fund manager Gregoire Tournant's bid to
dismiss a criminal fraud case over his role in causing more than
$7 billion of investor losses.
    In an order made public on Friday, U.S. District Judge Laura
Taylor Swain in Manhattan federal court denied Tournant's motion
to dismiss the five-count indictment, which also includes an
obstruction charge. Tournant has pleaded not guilty.
    Swain plans to file a redacted opinion containing her
reasoning as soon as mid-August.
    Her decision followed the July 12 approval by another
Manhattan federal judge of Allianz's $6 billion settlement with
U.S. authorities, in which a unit of the German insurer pleaded
guilty to a securities fraud criminal charge.
    Tournant had been the creator and chief investment officer
of Allianz's now-defunct Structured Alpha Funds.
    Once with more than $11 billion of assets under management,
the funds lost about $7 billion in February and March 2020 as
the start of the COVID-19 pandemic disrupted markets.
    Prosecutors accused Tournant of covering up the funds' risks
and trying to mislead Allianz's in-house lawyers and the U.S.
Securities and Exchange Commission, while pocketing about $60
million in pay.
    Lawyers for Tournant did not immediately respond to requests
for comment on Swain's order.
    In seeking a dismissal, Tournant said the law firm Sullivan
& Cromwell, which had represented him and Allianz, "switched
sides" and made him a scapegoat to "save" the German insurer
after it decided to cooperate with prosecutors.
    Tournant said dismissing the indictment was justified
because prosecutors' "intrusion" into his attorney-client
relationship had been "manifestly and avowedly corrupt."
    The U.S. Attorney's office in Manhattan countered that
Tournant's claims were baseless, and that he was seeking to
evade responsibility "by laying blame at the feet of everyone
but himself."
    Two other former portfolio managers have pleaded guilty in
the case and agreed to cooperate with prosecutors.
    Tournant's trial is scheduled for Feb. 5, 2024.
    The case is U.S. v. Tournant, U.S. District Court, Southern
District of New York, No. 22-cr-00276.   

 (Reporting by Jonathan Stempel in New York;
Editing by Marguerita Choy)
 ((jon.stempel@thomsonreuters.com; +1 646 223 6317; Reuters
Messaging: jon.stempel.thomsonreuters.com@reuters.net))