Ex-Allianz executive wants Structured Alpha fraud charges dismissed over lawyers' alleged conflict
By Jody Godoy
NEW YORK, Jan 30 (Reuters) -The former Allianz SE ALVG.DE fund manager charged with fraud over the multibillion-dollar collapse of a group of investment funds urged a U.S. judge on Monday to dismiss the criminal case, saying lawyers who once represented him improperly "switched sides."
Gregoire Tournant, the former chief investment officer who created the now-defunct Structured Alpha Funds, accused the law firm Sullivan & Cromwell of helping Allianz, also a client, make him a scapegoat after the German company decided to cooperate with prosecutors.
In court filings, Tournant's lawyers told U.S. District Judge Laura Taylor Swain in New York City the law firm was "pushed to the extreme" by the serious penalties facing Allianz, and that prosecutors engaged in "manifestly and avowedly corrupt" conduct by targeting him.
Neither Sullivan & Cromwell nor the office of U.S. Attorney Damian Williams in New York City immediately responded to requests for comment.
Once with more than $11 billion of assets under management, the Structured Alpha funds lost more than $7 billion as COVID-19 roiled markets in February and March 2020.
Prosecutors said Allianz Global Investors US LLC misled pension funds by understating the Structured Alpha funds' risks, and by having "significant gaps" in its oversight.
Last May, Allianz's U.S. asset management unit pleaded guilty to securities fraud and its parent agreed to pay more than $6 billion to resolve federal probes.
Tournant has pleaded not guilty to fraud, conspiracy and obstruction charges.
According to court papers, he was charged two months after Allianz's lawyers met with prosecutors and urged them to defer charges against the asset management unit, arguing that a guilty plea would be a "death penalty."
Notes from the meeting filed in court showed that Sullivan & Cromwell lawyers told prosecutors that Tournant might seek to have the firm disciplined for sharing information it obtained while representing him, though the lawyers did not think the information was protected by attorney-client privilege.
The law firm was "coerced" to "turn on one client in order to save another" because of Department of Justice policies requiring companies to cooperate against individuals to receive leniency, Tournant's lawyers said.
Reporting by Jody Godoy in New York
Editing by Matthew Lewis
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.