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Calcaterra Pollack Files Lawsuit Following Collapse of Allianz Structured Alpha Funds

On September 23, 2020, Calcaterra Pollack LLP filed suit against Allianz Global Investors, U.S. LLC (“AllianzGI”) and its parent company, Allianz SE, as a result of investment losses sustained by three of the New York Metropolitan Transportation Authority’s (“MTA”) pension and employee benefit funds.

As alleged in the complaint, the plaintiffs were harmed by the “negligent and imprudent mismanagement of an investment manager that failed to act as a reasonably prudent manager would act in the face of an historic market dislocation.” While other actors in global financial markets expressed concern following news of the global COVID-19 pandemic, the complaint alleges that “AllianzGI made a directional bet that the market would normalize – a bet that carried tremendous risk and that stood in direct conflict with its stated investment strategy against directional positioning of the portfolio.”

Specifically, the complaint further alleges that the plaintiffs invested in AllianzGI’s Structured Alpha 1000 fund, which “focused on “equity indices” options, also referred to as index options,” and “failed to follow the “all-weather” hedging and risk-management strategies that it repeatedly touted as capable of “perform[ing] whether equity markets are up or down, smooth or volatile.”

The complaint also alleges that “AllianzGI also committed to a robust, multi-tiered risk management protocol, purportedly consisting of “multiple layers,” including tail-risk hedging [to “protect against a market crash”], real-time monitoring, and independent risk-oversight,” and that “AllianzGI failed to perform adequate stress testing (or at a minimum, it failed to heed the results of its stress testing), which should have identified the unreasonable levels of risk on its books.”

According to Reuters, the MTA and other investors in the AllianzGI Structured Alpha family of funds lost billions of dollars in the value of their investments during the first quarter of 2020. (https://www.reuters.com/article/us-health-coronavirus-allianz-investors/u-s-pension-funds-sue-allianz- after-4-billion-in-coronavirus-losses-idUSKBN26J2K8). Because of its extremely poor performance, the Structured Alpha 1000 Fund was entirely liquidated on April 23, 2020. 

The case is now pending in the U.S. District Court for the Southern District of New York and is captioned as Metropolitan Defined Benefit Pension Plan Master Trust, et al. v. Allianz Global Investors, U.S. LLC, et al., Case No. 1:20-cv-07842. To learn more, the complaint can be viewed here

Calcaterra Pollack LLP attorneys Regina M. Calcaterra and Justin K. Teres are the attorneys of record on this matter.