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Ex-Allianz SE hedge fund manager pleads guilty to fraud charges

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Gregoire Tournant, a former hedge fund manager at Allianz SE, has pleaded guilty to fraud charges related to billions of dollars in investor losses, two years after a unit of the investment firm agreed to pay $5.8bn in penalties for realted offences, according to a report by Bloomberg.

At a federal court hearing in Manhattan on Friday, Tournant changed his plea, admitting to two counts of investment adviser fraud in connection with managing a group of hedge funds that collapsed during the pandemic. Allianz Global Investors US, the unit involved, had pleaded guilty to fraud in 2022 for misleading investors seeking low-risk investments.

Tournant, 57, who previously served as chief investment officer and co-lead portfolio manager of the hedge fund group, initially pleaded not guilty to several charges, including securities fraud and conspiracy to obstruct justice. Had he gone to trial and lost, he faced up to 20 years in prison for the most serious charge. Sentencing is now set for 16 October.

During the hearing, Tournant admitted to providing altered documents to fund investors between 2014 and 2020.

Tournant’s plea change follows potential discussions to resolve the case earlier this year. His attorneys, Seth Levine and Daniel Alonso, declined to comment after the hearing.

In February 2022, Allianz terminated Tournant and Stephen Bond-Nelson, who were responsible for the company’s Structured Alpha hedge funds. The funds, which are designed to profit from market volatility, incurred massive losses during the early pandemic days, triggering investigations by US regulators. Trevor Taylor, another manager involved with the funds, also left the company at that time.

Investors affected included the Arkansas Teacher Retirement System and New York’s Metropolitan Transportation Authority. Tournant was arrested and charged with fraud, while Bond-Nelson and Taylor pleaded guilty and agreed to cooperate with prosecutors.

As part of the plea deal, Tournant agreed to forfeit $17m in compensation linked to the fraud, including claims to more than $14m in deferred compensation.

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