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EXCLUSIVE Investigated against Allianz in Germany for investment funds

The logo of the insurer Allianz SE can be seen on the company building in Puteaux in the financial and business district La Defense near Paris, outside Paris, France, 14 May 2018. REUTERS / Charles Platiau / File Photo

  • German investigations have picked up speed in the past few weeks
  • Investigations are running through several BaFin departments
  • Allianz executives outside the fund area in focus
  • Follows SEC, DOJ, and investor litigation investigations
  • Allianz says “absolutely normal process”

FRANKFURT, September 7 (Reuters) – German regulators have launched an investigation into the country’s largest financial company, Allianz (ALVG.DE), after some of its US mutual funds collapsed last year, people with direct knowledge said Matter Reuters with.

The move puts pressure on the insurer, which has already faced a number of investor lawsuits over its structured alpha funds and related investigations by the U.S. Department of Justice (DOJ) and the Securities and Exchange Commission (SEC).

The German insurer is one of the largest asset managers in the world with 2.4 trillion euros ($ 2.9 trillion) in assets managed through bond giant Pimco and Allianz Global Investors, who managed the funds at the center of the investigation.

The investigation by the German financial supervisory authority BaFin extends over several departments of the institute, said several sources on condition of anonymity, since the investigation is still ongoing.

BaFin officials are examining the extent to which Allianz executives outside the fund area knew or were involved in events that led to the funds amassing billions in losses, the people said.

An Allianz spokesman said on Tuesday that the company was in regular contact with BaFin on all issues, including Structured Alpha. “This is a completely normal process,” said the spokesman.

Sources said the German investigation was currently in a fact-finding phase and involved several people, but had gained momentum since Allianz announced the DOJ investigation on Aug. 1.

The insurer said last month that it had reassessed the risks associated with the funds after being contacted by the DOJ and concluded that the matter could materially affect its future financial results.

The various investigations and lawsuits revolve around Allianz Global Investor’s Structured Alpha Funds, which ran US pension funds for workers such as teachers and subway workers. The funds were also marketed to European investors.

After the coronavirus pandemic rocked the markets, funds plummeted, in some cases by 80% or more.

The losses from bad bets on options were so extreme that Allianz closed two funds worth $ 2.3 billion in late 2019 in March 2020. Losses on others caused some investors to withdraw the rest of their money.

Investors have now filed 25 lawsuits for $ 6 billion in damages. Allianz lawyers said investors are demanding and aware of the risks.

($ 1 = 0.8428 euros)

Reporting from Tom Sims; Adaptation by David Clarke and Louise Heavens

Our Standards: The Thomson Reuters Trust Principles.

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