Bernstein Litowitz Berger & Grossmann LLP has taken on a lead role in prosecuting claims on behalf of institutional investors that have suffered losses in connection with investments in the Allianz Structured Alpha Funds—a suite of investment products developed and overseen by Allianz Global Investors U.S. LLC.
BLB&G filed the first complaint on behalf of Structured Alpha investors on behalf of the Arkansas Teacher Retirement System (ATRS) in June 2020. That complaint detailed Allianz's misconduct and the breaches of fiduciary and contractual duties that led to ATRS's losses and was developed during the comprehensive proprietary investigation conducted by BLB&G's Allianz Structured Alpha Funds Team of lawyers, former prosecutors, certified fraud examiners, and financial analysts. Since then, BLB&G has filed four other lawsuits on behalf of institutional investors that suffered losses in the Structured Alpha Funds, and Allianz's representations concerning the Alpha Funds are now being investigated by the SEC.
In part due to the significant work it has performed on behalf of Structured Alpha investors, BLB&G now serves as one of two liaison counsel in the 17 related actions on behalf of Structured Alpha investors pending before Judge Failla in the Southern District of New York.
Background on Allianz's Misconduct
In marketing materials and in presentations to Structured Alpha investors, Allianz touted the Funds as providing stable returns and protection during a market downturn, and assured Structured Alpha investors that their investment assets would be prudently protected by Allianz's superior risk management acumen and the Structured Alpha Funds' structural risk protections. However, BLB&G’s analysis revealed that Allianz deviated dramatically from the market-neutral strategy it described to investors and that the Funds lacked any meaningful protection against a market downturn or increase in volatility.
Allianz’s departures from the Structured Alpha Funds’ investment mandate directly contradicted the warnings of Allianz SE's own chief economist, Mohamed El-Erian. Beginning in February 2020, El-Erian cautioned that the then-burgeoning pandemic would have substantial market ramifications, and urged investors to “resist our inclination to buy the dip.” But that is exactly what Allianz did in February and March 2020—positioning the Structured Alpha Funds to generate returns if volatility decreased and equity prices increased. As Allianz SE’s economist warned, when the pandemic's impact on the markets unfolded, increases in volatility and decreases in the equity markets generated massive losses for the Funds.
Similarly, the Alpha Funds' position in volatility options was not "market-neutral" but would instead decline in value if there was an increase in volatility. Moreover, while the Structured Alpha Funds were supposed to have positions in place to protect against "a sever downside market move, such as the Black Monday of 1987," in reality, Allianz failed to implement any meaningful downside protection whatsoever.
Allianz's misconduct and breaches of fiduciary and other duties caused massive losses, and its refusal to account to its clients left investors with no choice but to take action to recover their losses by filing suit.
Structured Alpha Investor Resources
In addition to the active litigations mentioned above, BLB&G is working with numerous other institutional investors who suffered losses as a result of this misconduct, and is focused on helping our clients find justice in this difficult situation.