Allianz cooperates with the U.S. Department of Justice to investigate the structural Alpha Fund Reuters

© Reuters. File photo: The logo of Allianz SE, an insurance company in La Défense Pito, outside of Paris, France, May 14, 2018. REUTERS/Charles Platiau/File Photo

FRANKFURT (Reuters)-German insurance company Allianz said on Sunday that the US Department of Justice has begun an investigation into the structured Alpha Fund of Allianz (DE:) Global Investors after a lawsuit was filed in a US court on the matter.

The pension funds of truck drivers, teachers and subway workers have filed a lawsuit in the United States against Allianz Global Investors, one of the world’s top asset management companies, on the grounds that they failed to protect their investments during the instability of financial markets during the coronavirus pandemic.

The panic in the market last year caused billions of dollars in losses and hit many investors, but no other top asset management company faced a large number of lawsuits related to the turmoil in the United States.

Allianz stated that its Allianz Global Investor Division has received voluntary requests for documents and information from the U.S. Department of Justice (DOJ), and Allianz is fully cooperating with the DOJ and the U.S. Securities and Exchange Commission.

Allianz’s management has reassessed the matter and concluded that there are risks associated with the structured Alpha Fund issue, which may have a significant impact on Allianz’s future financial performance.

The insurance company stated that it is currently unable to reliably estimate the amount of any possible solution, including potential fines, and has not confirmed the reserve at this stage.

The US lawsuit alleges that Allianz Global Investors has deviated from its strategy of using options to prevent short-term financial market crashes in its structured Alpha fund series.

Last year, Allianz was forced to close two private hedge funds after heavy losses, triggering a wave of lawsuits that the company said were “defects in law and in fact.”

In total, various lawsuits filed in the Southern District of New York allege that investors have lost approximately US$4 billion.

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