(Reuters) – A US judge has ruled that Germany's Allianz SE must meet investors' claims that they "abandoned" the investment strategies they promised to use on hedge funds that suffered heavy losses when the COVID-19 pandemic shook markets early last year. year.  In an 81-page decision, U.S. District Judge Katherine Polk Failla of Manhattan said investors could try to show that Allianz was careless and lacked good faith in managing its Structured Alpha funds. She also dismissed some state law-based allegations.
Thursday's decision raised 12 lawsuits, including two proposed class actions, in which investors claimed they would suffer more than $ 4 billion. The insurer faces more than two dozen such lawsuits and is seeking at least $ 6 billion.
Allianz's funds used complex alternative strategies to generate predictable returns without excessive risk, but according to investors, imploded in February and March 2020 after silently removing hedges designed to minimize losses.
According to court papers, the Structured Alpha Global Equity 500 lost three quarters of its value, lagging behind the benchmark index by almost 60 percentage points. Two other funds that were once worth $ 2.3 billion were liquidated, which included losses for investors.
Judge Failla said that investors could try to show that Allianz violated the terms of a memorandum of understanding of the funds, which she said the insurer presented as a "glorified" advertising brochure, the contents of which can be ignored at will.
Allianz and its lawyers did not immediately respond to a request for comment. Lawyers for investors in the proposed class actions did not immediately respond to similar requests.
On Thursday, Allianz announced that its chief executive officer, Jacqueline Hunt, was leaving her day-to-day role and announced changes to the board.  The changes follow Allianz's announcement on August 1 that the US Department of Justice was investigating the Structured Alpha Funds.
That probe includes an examination of whether Allianz's fund managers incorrectly represented the funds' risks to investors, three people with knowledge of the issue said earlier in September.
The US Securities and Exchange Commission is also investigating the collapse of the funds. Catalog