Former Allianz fund manager Gregoire Tournant pleaded guiltyu to fraud charges. Tournant’s case stemmed from the March 2020 collapse of the German insurer’s now-defunct Structured Alpha funds, which Tournant had created and oversaw as chief investment officer. Tournant opf Colorado was charged with conspiracy, securities fraud, investment adviser fraud and obstruction of justiuce since 2022.
Prosecutors said Tournant misled investors about the funds’ risks by altering performance data and diverging from his promised hedging strategy, and obstructed a U.S. Securities and Exchange Commission probe by directing a colleague to lie. The SEC’s complaint, filed in the federal district court in Manhattan, alleges that Structured Alpha’s Lead Portfolio Manager, Gregoire P. Tournant, orchestrated the multi-year scheme to mislead investors who invested approximately $11 billion in Structured Alpha, and paid the defendants over $550 million in fees. It further alleges that, with assistance from Co-Lead Portfolio Manager, Trevor L. Taylor, and Portfolio Manager, Stephen G. Bond-Nelson, Tournant manipulated numerous financial reports and other information provided to investors to conceal the magnitude of Structured Alpha’s true risk and the funds’ actual performance. It was also alleged that the Defendants reduced losses under a market crash scenario in one risk report sent to investors from negative 42.1505489755747% to negative 4.1505489755747% — by simply dropping the single digit 2. In another example, defendants “smoothed” performance data sent to investors by reducing losses on one day from negative 18.2607085709004% to negative 9.2607085709004% — this time by cutting the number 18 in half. When the 2020 COVID-related market volatility revealed that AGI US and the defendants had misled investors about the fund’s level of risk, the fund suffered catastrophic losses and investors lost billions; the defendants all the while profited from their deception. The complaint further alleges that Tournant, Taylor, and Bond-Nelson then made multiple, ultimately unsuccessful, efforts to conceal their misconduct from the SEC, including false testimony and meetings in vacant construction sites to discuss sending their assets overseas. Here is a copy of the original complaint:https://www.sec.gov/files/litigation/complaints/2022/comp-pr2022-84.pdf
In May 2022, Allianz agreed to pay more than $6 billion and its U.S. asset management unit pleaded guilty to securities fraud to resolve government probes into the funds collapse. Two other former Allianz fund managers pleaded guilty in the case.
Tournanthad pleaded not guilty to five criminal counts including investment adviser fraud, securities fraud, conspiracy and obstruction.
He had also accused the law firm Sullivan & Cromwell, which had represented him and Allianz, of making him a scapegoat after Allianz decided to cooperate with federal prosecutors. Judge Swain rejected Tournant’s request to dismiss the criminal case last August.
As a result, this fraud affected over 100 institutional investors, representing more than 100,000 individuals – “from laborers in Alaska, to teachers in Arkansas, to bus drivers and subway conductors here in New York City,” according to the U.S. Attorney Damian Williams for the Southern District of New York.
Jeffrey Newman is a whistleblower lawyer, whose firm represents whistleblowers in healthcare fraud cases under the False Claims Act (FCA) and also under the Securities and Exchange, FINCEN and CFTC whistleblower programs. He can be reached at Jeff@JeffNewmanLaw.com or at 617-823-3217
