In one of the most shocking developments, one of Germany’s biggest companies, Allianz, is facing a probe by German regulators. The investigation is happening as some of its US investment funds died the previous year. The claim was carried out by people closely linked with it.
Moreover, the currency issue heightens the stress over the insurer as it is already facing a slew of impending lawsuits and cases for its Structures Alpha Funds. Furthermore, there are related investigations from the SEC (Securities and Exchange Commission) and DOJ ( US Department of Justice).
Interestingly, when it comes to money management, the German insurer is one of the world’s largest USD 2.9 trillion (2.4 trillion euros) in assets management through Allianz Global Investors and bond giant Pimco. They managed the wealth at the centre’s probe.
On anonymity, several sources confirmed that BaFin, Germany’s financial regulator, is investigating across the institution’s several departments. They concealed their identity as the investigation is ongoing.
BaFin is investigating the extent of corroded involvement or knowledge executives had regarding the events dragging up to the losses of billions of dollars of funds due to funds racking outside the fund division.
Allianz spokesperson did not respond to the allegations and refused to offer any statement on the controversy and investigation by BaFin.
As per the sources, the German investigators were still looking to generate and locate some facts that involved interrogation with some people. However, it paced up the proceedings after the announcement of a probe by Allianz on DOJ on August 1, 2021.
In a statement, the insurer said last month that after DOJ approached it, the insurer reassessed the perils associated with funds. It concluded that the future financial results could be materially hit due to events.
Around Structured Alpha Funds of Allianz Global Investor, several investigations and lawsuits are lurking. It offered services to the US pension funds for several employees, including subway employees and teachers. Similar funds were marketed to European investors.
However, things got dilapidated after the spread of the contagious COVID-19 virus. In some cases, the funds plunged to 80 per cent as the markets went into a tailspin.
In March 2020, Allianz had to close two funds following the extreme losses from bad bets it attempted on options. At the end of 2019, they were worth USD 2.3 billion. Thus, investors were forced to withdraw whatever was left of their funds.
Now, the situation is, investors have filed lawsuits against the company claiming damages worth USD 6 billion. They say that Allianz betrayed them and didn’t provide any downside protection as per the strategy for market crashes. On the contrary, the defence counsel stated that investors were wary of the risk they may induce.