Allianz Global Investors settles more lawsuits over Structured Alpha losses

Teamster Members Retirement Plan, Carol Stream, Ill., Fairfield (Conn.) Police and Firemen’s Retirement System, and New England Health Care Employees Pension Fund, Hartford, Connecticut, have dropped their class action lawsuit against Allianz Global Investors this alleged mismanagement of enhanced return strategies managed by the company.

The plans, board of directors and selected participants dropped the consolidated lawsuit in the U.S. District Court in New York on Tuesday after reaching “settlements ending all claims” against the fund manager, according to the court filing. court.

Settlement amounts were not disclosed.

The original lawsuits were all filed in 2020 following losses suffered by AllianzGI’s Structured Alpha strategies in February and March 2020 during the extreme market downturn that greeted the onset of the COVID-19 pandemic.

Allianz Structured Alpha strategies had historically been designed to identify “areas of systematic disagreement with option prices on the probability distribution of future index movements,” according to a September 2016 AllianzGI presentation.

The Teamster plan lawsuit, filed in September 2020, specifically said that when stock markets turned volatile in late February and early March of that year, the defendants abandoned the fund’s risk controls and “recklessly” threw the dice” in the hope that adverse market trends would quickly reverse before the fund had to recognize devastating losses,” court documents say.

As of December 31, 2020, the New England Health Care Employees Pension Fund and Teamster Members Retirement Plan had $911 million and $837 million in assets, respectively, according to their most recent Form 5500 filings. Fairfield was not immediately available.

William C. Fredericks, partner at Scott + Scott Attorneys at Law, lawyers for the Teamsters plan; David S. Golub, partner at Silver Golub & Teitell, attorneys for the Fairfield and New England Health Care plans; and John Wallace, spokesman for AllianzGI, could not immediately be reached for comment.

A dozen pension funds and other institutional investors filed lawsuits against AllianzGI in 2020, and settlements have been gradually announced since February, when the manager’s parent company, Allianz Group, said it was shelving 3 .7 billion euros ($4 billion) to cover expected settlements with US investors and government officials following the collapse of its Structured Alpha funds. Raytheon Technologies Corp., Waltham, Mass., and the National Employee Benefits Committee of Blue Cross Blue Shield were the first to announce Feb. 28 that they had dropped the lawsuits after reaching undisclosed settlements.

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