Former Allianz fund manager Gregoire Tournant and his attorney Daniel Alonso arrive at United States Court in Manhattan where he was expected to plead guilty over his role in the 2020 collapse of the Structured Alpha funds, which led to $7 billion of investor losses and a $6 billion criminal settlement for Allianz, in New York City, U.S., June 7, 2024. REUTERS/Mike Segar
New York: A former Allianz SE hedge fund manager charged with fraud over billions of US dollars in investor losses has pleaded guilty to providing altered documents to hide the riskiness of the funds’ investments, two years after a unit of the company agreed to pay US$5.8bil in penalties.
At a hearing in federal court last Friday in Manhattan, Gregoire Tournant changed his plea and admitted to two counts of investment-adviser fraud in managing a group of hedge funds that collapsed during the pandemic.
The unit, Allianz Global Investors US, pleaded guilty to fraud in 2022 for misleading investors seeking low-risk investments.
Tournant, 57, was chief investment officer and co-lead portfolio manager of the hedge-fund group.
He had pleaded not guilty to criminal charges including securities fraud and conspiracy to obstruct justice.
If he had gone to trial and lost, he faced as many as 20 years in prison for the most serious charge in the earlier indictment. He is scheduled to be sentenced on Oct 16.
Tournant – who said he is being treated for multiple neurological issues and coughed throughout the hearing – told Judge Laura Taylor Swain that he provided altered documents that were sent to fund investors between 2014 and 2020.
“Gregoire Tournant and his co-conspirators lied to investors, secretly exposed them to risk, and as Tournant has now admitted, sent victims altered risk reports,” Manhattan US Attorney Damian Williams said in a statement.
“Today’s guilty plea is the culmination of a multi-year investigation and prosecution that has held wrongdoers responsible, made victims whole, and demonstrated this office’s resolve to pursue even the most sophisticated of financial crimes.”
Tournant’s change-of-plea hearing came after potential discussions to resolve the case were flagged in January.
His lawyers, Seth Levine and Daniel Alonso, declined to comment following the hearing.
Allianz fired Tournant and Stephen Bond-Nelson in February 2022.
They were responsible for the company’s Structured Alpha hedge funds, a suite of funds that allegedly lost billions of US dollars and prompted probes by US regulators. A third manager involved in running the funds, Trevor Taylor, left at the same time.
The hedge funds were set up to profit from volatility yet incurred huge losses during the early days of the pandemic.
The investors included public pension fund Arkansas Teacher Retirement System and New York’s Metropolitan Transportation Authority.
Tournant, of Basalt, Colorado, was arrested and charged with fraud.
Bond-Nelson and Taylor pleaded guilty and agreed to cooperate with prosecutors.
Tournant lost a bid last August to dismiss the charges.
He had argued that lawyers at Sullivan & Cromwell, who initially represented both him and Allianz, gained information they used to push the government to focus on him instead of the company.
Prosecutors said he was trying to avoid trial by making inflammatory and baseless claims.
Tournant also agreed to forfeit US$17mil in pay traceable to the fraud, prosecutors said, including claims to more than US$14mil in deferred compensation. — Bloomberg
