Chief Investment Officer Of Allianz Global Investors U.S. Pleads Guilty To Investment Adviser Fraud

Damian Williams, the United States Attorney for the Southern District of New York, announced today the guilty plea of GREGOIRE TOURNANT, the former chief investment officer and co-lead portfolio manager for a series of private investment funds managed by Allianz Global Investors U.S. LLC (“AGI”), to investment adviser fraud.  AGI and two other AGI employees previously pled guilty, and AGI paid more than $3 billion in restitution to the innocent victims of this fraud, paid a criminal fine of approximately $2.3 billion, and forfeited approximately $463 million to the Government.  TOURNANT pled guilty today before U.S. District Judge Laura Taylor Swain, and he is scheduled to be sentenced on October 16, 2024.  

U.S. Attorney Damian Williams said: “Gregoire Tournant and his co-conspirators lied to investors, secretly exposed them to risk, and as Tournant has now admitted, sent victims altered risk reports.  Today’s guilty plea is the culmination of a multi-year investigation and prosecution that has held wrongdoers responsible, made victims whole, and demonstrated this Office’s resolve to pursue even the most sophisticated of financial crimes.”

According to the allegations contained in the Indictments, Superseding Information, and other filings and statements made in court:

Between 2014 and 2020, TOURNANT was the chief investment officer of a set of private funds at AGI known as the Structured Alpha Funds.  These funds were marketed largely to institutional investors, including pension funds for workers all across America.  TOURNANT and his co-defendants misled these investors about the risk associated with their investments.  To conceal the risk associated with how the Structured Alpha Funds were being managed, TOURNANT and his co-defendants provided investors with altered documents to hide the true riskiness of the funds’ investments, including that investments were not sufficiently hedged against risks associated with a market crash.  In March 2020, following the onset of market declines brought on by the COVID-19 pandemic, the Structured Alpha Funds lost in excess of $7 billion in market value, including over $3.2 billion in principal, faced margin calls and redemption requests, and ultimately were shut down. 

On May 17, 2022, AGI pled guilty to securities fraud in connection with this fraudulent scheme and later was sentenced to a pay a criminal fine of approximately $2.3 billion, forfeit approximately $463 million, and pay more than $3 billion in restitution to the investor victims.  TOURNANT’s co-defendants, Trevor Taylor and Stephen Bond-Nelson, previously pled guilty on March 8, 2022, and March 3, 2022, respectively.

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TOURNANT, 57, of Basalt, Colorado, pled guilty to two counts of investment adviser fraud, each of which carries a maximum sentence of five years in prison.  In connection with his plea, TOURNANT agreed to forfeit approximately $17 million in paid and deferred compensation traceable to his commission of the fraud.

The maximum potential sentence in this case is prescribed by Congress and provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Williams praised the outstanding work of the U.S. Postal Inspection Service and the Special Agents of the U.S. Attorney’s Office.  He also expressed appreciation for the Securities Exchange Commission, which previously initiated a civil proceeding against TOURNANT. 

This prosecution is being handled by the Office’s Securities and Commodities Fraud Task Force.  Assistant U.S. Attorneys Margaret Graham, Nicholas Folly, Allison Nichols, Thomas Burnett, Sarah Mortazavi, and Nicolas Roos are in charge of the prosecution.