Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
The lead manager in a funds scandal that led to a $6bn settlement between Germany’s Allianz and US authorities has pleaded guilty to investment adviser fraud, two years after two other managers pleaded guilty for their roles in the scheme.
The scandal at one of its US asset management units rocked Allianz, one of the world’s biggest insurance groups, casting doubt over its control functions and triggering an apology from its chief executive.
Gregoire Tournant pleaded guilty on Friday to two counts of investment adviser fraud, each of which carries a maximum sentence of five years in prison, US authorities said.
Tournant was the former lead manager of a set of funds at Allianz Global Investors that were marketed as being able to withstand a market crash, and amassed $11bn at their peak, before going on to make heavy losses in the 2020 pandemic sell-off.
Damian Williams, the US attorney for the Southern District of New York, said Tournant and the other two managers had “lied to investors, secretly exposed them to risk, and as Tournant has now admitted, sent victims altered risk reports”.
The guilty plea, he added, was “the culmination of a multiyear investigation and prosecution that has held wrongdoers responsible, made victims whole, and demonstrated this office’s resolve to pursue even the most sophisticated of financial crimes”.
Tournant agreed to forfeit about $17mn in paid and deferred compensation, authorities said. He is due to be sentenced in October.
Authorities alleged Tournant and the other managers lied to investors by understating the true risks being taken by the funds and overstating the level of oversight.
According to the original legal filings, Tournant made changes including removing a digit from a percentage to slash projected losses in a fund stress test.
Tournant told an investor in 2014 that he had “behind me one of the largest and most conservative insurance companies in the world monitoring every position that I take”. The US Department of Justice investigation found “significant gaps and weaknesses” in the funds’ controls, but did not find that anyone outside of the structured-products group was aware of the misconduct.
In its own civil complaint two years ago, the US Securities and Exchange Commission alleged Tournant had urged one of his colleagues to give false testimony and met another in an empty construction site to discuss how to reply to investigators’ queries.
The settlement included the money paid to the funds’ investors. As regulators probed the matter in 2021, Allianz was forced to warn on profits as the potential earnings hit became clear, and the insurer’s chief executive Oliver Bäte said at the time that the company was “deeply sorry” about the impact on investors.
A lawyer for Tournant declined to comment. Allianz declined to comment.
Additional reporting by Christian Berthelsen
