Munich After billions in hedge fund losses in the USA, Allianz is under closer scrutiny from the Bafin. The Bonn supervisors have asked the insurer to regulate the responsibilities of the in-house compliance department more clearly and to improve internal controls. A deadline has been set for this. The Handelsblatt learned this from the environment of the authority. The Bafin itself did not want to comment on the case. Wirtschaftswoche first reported on the procedure.
The disaster surrounding failed hedge fund strategies, which the Allianz subsidiary AGI has been selling to institutional investors in the USA for around 15 years, also has repercussions on the home market. Even if these products were not sold here and therefore did not cause any damage to investors.
The damage to the image, which investors and investor advocates have always criticized in recent months, is also noticeable in Germany. Allianz did not want to comment officially on this matter. Insiders report, however, that there is no official investigation by the Bonn authorities into Structured Alpha at Allianz and that the process has been in discussion for a long time.
The core of the massive losses was a small unit of the fund subsidiary AGI in Florida. When the markets came under massive pressure at the beginning of the corona crisis in spring 2020, the highly speculative structured alpha funds that were sold there suffered massive losses. Some had to be closed, and around seven billion dollars were lost during this phase. Around 25 mainly institutional investors then sued Allianz and urged compensation.
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In May, after months of negotiations, Allianz reached an agreement with the US authorities. The Dax group pleaded guilty and agreed to pay almost six billion dollars in damages and penalties. Around five billion dollars went to affected customers.
A double-digit million sum also flowed to top law firms that had represented Allianz with a large contingent. “Allianz Global Investors has admitted to having defrauded investors for several years, concealing losses and concealing the risks of a complex strategy,” the agreement with the SEC said.
Fund managers are said to have manipulated
However, there was also a surprising turn in the proceedings. Three fund managers in Florida are said to have manipulated the structured alpha funds, came out of the investigation by the US authorities. You now have to answer to a court in the USA.
The authorities charged Allianz officials with failing to introduce important risk controls. In the meantime, the structured products department at AGI-US has been dissolved. The remaining business was transferred to the investment company Voya. That was also one of the requirements of the US judiciary that AGI-US was no longer allowed to run its own business.
The Bafin had already started its own investigations into Allianz in September. That became known last year. A month earlier, the case had picked up speed after the US Securities and Exchange Commission and the US Department of Justice took an interest in it.
At the same time, the German supervisors also collected information. On the one hand, it was checked whether managers outside the fund area knew about the misconduct in the USA or were involved in it. Nothing was found about this. The completed investigations by the US judiciary had also found nothing incriminating.
In-house controls are checked
Instead, the German supervisors, like their US colleagues, are now investigating whether Allianz has failed to introduce important risk controls. The investigators are concerned with checking the in-house controls at Allianz. The aim is to clarify whether Allianz adequately checks its three-digit number of subsidiaries worldwide.
The Bonn authorities did not comment on the status of the investigation. One indicator, however, is that the Bafin has not yet made concrete measures against Allianz public, as regulated in Section 319 VAG. According to this, measures that have been imposed on a company or a manager and are final are published.
The fact that nothing has yet been announced in the case of Allianz could be due to the fact that specific supervisory measures are not yet at the stage, but only in the area of an urgent request, according to Bafin officials.
The Allianz share did not react to possible Bafin investigations. With an increase of around 1.5 percent, it was one of the biggest winners in the Dax.
More: Hedge fund debacle, dividends, business in Russia: what is important at Allianz now.