Allianz, one of the biggest financial companies in Germany is under investigation after the closure of some of its US investment funds following steep losses last year.
The investigation by Germany's financial regulator, Federal Financial Services Authority (BaFin), is across multiple departments of the institution, said sources who spoke on the condition of anonymity, due to ongoing investigation.
Several investors filed lawsuits against Allianz over its structured Alpha funds. The US Department of Justice (DOJ) and the Securities and Exchange Commission have carried out the investigations pertaining to the case.
The German insurance company is one of the largest money managers globally and has €2.4 trillion ($2.9 trillion) in assets under management through Pimco and Allianz Global Investors, the bond companies responsible for the funds in question.
BaFin officials are examining the level of awareness of Allianz executives outside the fund department, or their involvement in the events leading to losses up to billions of dollars.
The sources said the German investigation is currently in the fact-finding phase and it involved multiple people, but had picked up pace since Allianz announced the DOJ probe on 1 August.
25 cases filed with damage claims amounting to $6 billion
Allianz faces 25 lawsuits from investors who have claims amounting to $6 billion in damages. They accused the insurer of not providing downside protection for market crashes.
Allianz Global Investors’ Structured Alpha Funds catered to US pension funds and European consumers. The funds dropped rapidly and fell by 8% or more in some cases as the COVID-19 pandemic severely hit the markets.
Allianz closed two funds worth $2.3 billion in 2019. Its other funds also faced losses and investors withdrew their money.
Recently, an Australian court fined two local units of Allianz SE a total of $1.5 million for a civil case registered by the Australian Securities and Investments Commission in September 2020. The company was accused of selling travel insurance to ineligible customers and has not disclosed the methods of calculating the premiums.
The insurer said it had reassessed the risks related to the funds after being approached by the DOJ and concluded that this matter could materially hit its future financial results.