Former Allianz manager must face US fraud charges on $7B investor loss

A U.S. judge has rejected former Allianz 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 pleaded no contest.

Swain will file an opinion with redactions containing all of her reasons as soon as possible, possibly as early as the middle of 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.

After managing assets worth more than $10 billion, these funds have lost approximately $7 billion since February 2020 due to the COVID-19 pandemic.

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.”

In the same case, two other former portfolio managers pleaded guilty and have agreed to work with prosecutors.

Tournant’s trial is scheduled for Feb. 5, 2024.

U.S. District Court Southern District of New York No. 22-cr-00276 is the case. 22-cr-00276.

Related:

Topics
USA
Fraud
Profit Loss