The multi-billion dollar scandal surrounding funds for large US investors is now catching up with Allianz in Germany. The financial regulator Bafin has sent the insurer a letter with demands. In it, she demands that the group improves internal controls and regulates responsibilities more clearly. First had the business week reported about it. The Bafin therefore expects Allianz to implement its demands. Otherwise she would be heading for a “big problem”. Neither Bafin nor Allianz initially wanted to comment on this.
The agency launched investigations into Allianz last summer. The background is the scandal surrounding so-called structured alpha funds in the USA. The subsidiary Allianz Global Investors had sold the funds to major customers such as pension funds as supposedly crisis-proof. In the Corona crisis, they had suffered high losses of more than seven billion dollars. What initially looked like false speculation turned out to be outright fraud. Among other things, the responsible fund managers had falsified figures in risk reports for investors.
The group initially denied the allegations by investors, but changed tack when the US Department of Justice and the Securities and Exchange Commission (SEC) got involved in 2021. Allianz pleaded guilty to the authorities.
The Bafin wants to distinguish itself as an active supervisor with bite
The incident cost Allianz more than $6 billion. The Justice Department fined the insurer $2.33 billion. Allianz promised the victims $3.24 billion. In addition, $463 million was seized, and an additional $675 million was added in an SEC civil suit against Allianz. In addition, it will no longer be able to offer funds in the United States for ten years.
Allianz boss Oliver Bäte denied direct responsibility for the scandal. However, he has to put up with accusations of a lack of control. In other countries, too, Allianz does not always seem to have an eye on what its local companies are doing: In Australia, the group was sentenced to pay 900,000 euros for misleading advertising. In Bermuda, the responsible supervisory authority has imposed a fine of 1.4 million euros on Allianz Life Bermuda. The reason was violations of regulations on money laundering and terrorist financing.
It is important for the Bafin to show a clear edge against Allianz. After the Wirecard scandal, the supervisor had to be accused of inactivity. Under the new boss Mark Branson, the Bafin now wants to distinguish itself as an active supervisor with bite.