Former Allianz Employee Avoids Jail Time for $7 Billion Funds Collapse
A former Allianz fund manager, Gregoire Tournant, has been spared prison time for his involvement in a $7 billion funds collapse triggered by the COVID-19 pandemic. Tournant, 57, pleaded guilty to two counts of investment adviser fraud in June and agreed to relinquish $17.5 million in ill-gotten gains, including fraudulently obtained bonuses. Chief Judge Laura Taylor Swain sentenced him to 18 months of home confinement and three years of probation, taking into consideration his health issues and expressions of remorse.
Tournant’s defense lawyers had requested leniency from the court, emphasizing his health concerns and regret for his actions. They believed the case was less severe compared to typical investment adviser fraud schemes. The U.S. Attorney’s office in Manhattan had recommended a minimum of seven years in prison for Tournant due to the significant losses suffered by over 100 investors in his collapsed funds.
The collapse of the German insurer’s Structured Alpha funds in March 2020 led to massive investor losses and investigations by the government. Allianz subsequently agreed to a settlement of over $6 billion, with its U.S. asset management unit pleading guilty to securities fraud. Prosecutors revealed that the Structured Alpha funds, managed by Tournant, heavily relied on stock options to mitigate market downturns, which ultimately backfired during the pandemic-induced market turmoil in 2020.
Tournant was found guilty of misleading investors about the funds’ risks, manipulating performance data, deviating from promised hedging strategies, and impeding a U.S. Securities and Exchange Commission investigation by instructing a colleague to lie. The fraud occurred between 2014 and March 2020, during which Tournant received more than $60 million in compensation.
Despite the severity of the case, Tournant was ultimately spared a prison sentence in favor of home confinement and probation. The court’s decision was met with appreciation from his defense team, who viewed the outcome as just given the circumstances surrounding the case. The incident serves as a cautionary tale for investors about the importance of due diligence and transparency in the financial industry.
