The German Federal Financial Supervisory Authority (BaFin) has started its own investigation into Allianz SE’s Structured Alpha Funds, which are at the center of lawsuits and probes in the US following steep losses during the COVID-19 pandemic.
The BaFin is looking at the extent to which Allianz officials outside the Florida-based funds knew of the events leading up to the losses, said a person familiar with the matter, who asked for anonymity to discuss internal information.
Reuters reported on the BaFin probe earlier.
Officials for Allianz and BaFin declined to comment.
Allianz last month disclosed that the US Department of Justice had started a probe into the funds and warned that the matter could “materially impact” future earnings, sending shares of the insurer tumbling.
The company had already been facing lawsuits by investors alleging combined losses of about US$6 billion, as well as an investigation by the US Securities and Exchange Commission.
Allianz chief executive officer Oliver Baete, who has said that the insurer is fully cooperating with the US probes, has backed the Allianz Global Investors unit that housed the hedge-fund business, while pledging to take a close look at the products the unit offers to clients.
The Florida-based private hedge funds in question were designed to offer stable returns in a broad range of market conditions and provide protection against a market crash.
Two of the hedge funds were liquidated at the end of March last year and Allianz is in the process of winding down the remainder.
Allianz Global Investors, the company’s asset manager, has been defending itself from lawsuits by large pension funds and other investors, which have challenged how it invested client money during a market downturn sparked by the COVID-19 pandemic.
Allianz told a Manhattan federal judge in February that the plaintiffs are sophisticated investors that chose high-risk private funds with their eyes open.
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