Wednesday, October 21, 2020

Transit staff, truckers and academics say Allianz gambled away billions in pensions

The Metropolitan Transportation Authority (MTA), which operates the New York Metropolis subway, and the retirement fund for public college academics in Arkansas are among the many traders in search of damages from Allianz Global Investors for losses totaling over $three billion, in keeping with court docket information.
At the very least six separate complaints demanding a jury trial have been filed in opposition to Allianz (ALIZF) within the Southern District of New York since July. Allianz has denied wrongdoing and stated the lawsuits are with out advantage.

The pension funds, which invested in Allianz hedge funds on the reassurance that they have been protected in opposition to a market crash, declare in court docket paperwork that the asset supervisor mismanaged the funds by abandoning its professed funding technique with out informing its purchasers.

The “negligent and imprudent” actions meant that the “hard-earned pension funds” of important staff have been “decimated,” the MTA, which employs greater than 70,000 staff throughout New York Metropolis’s transport system, stated in court docket papers.

Market turmoil regarding the coronavirus pandemic wiped billions off world inventory markets in March and hammered funding portfolios. Whereas shares have since rebounded, Allianz International Traders was pressured to liquidate two of its hedge funds on account of steep losses, prompting the litigation from traders.

“Because of Allianz’s breaches, a considerable portion of [the pension plan] belongings meant to supply retirement safety to 1000’s of staff and their beneficiaries was worn out,” in keeping with the lawsuit filed by well being plan supplier the Blue Cross and Blue Shield Affiliation. Its retirement plans, which give pensions for individuals employed by insurers in its community, misplaced greater than $2 billion within the Allianz funds.

The Teamsters union, which represents truck drivers, has made related allegations, together with Pennsylvania’s Lehigh College. The pension funds for police, firefighters and metropolis staff in Fairfield, Connecticut, have additionally filed a go well with.

In every case, pension fund managers stated in court docket paperwork that they have been promised returns no matter market path and volatility, together with safety in opposition to sudden and excessive market downturns. They allege Allianz deviated from its funding mandate, and made choices as markets plummeted that uncovered the funds to further losses.

A spokesperson for Allianz International Traders stated that the allegations made by claimants are “legally and factually flawed.”

The claimants are skilled traders who “purchased these hedge funds within the data that they sought to ship substantial returns,” the spokesperson informed Carihargater Enterprise. “As was absolutely disclosed, the funds concerned dangers commensurate with these increased returns.”

An inside Allianz evaluation concluded that the portfolio of funds was always managed “in accordance with its design,” in keeping with a report posted to the corporate’s web site in July.

“Whereas the losses suffered within the portfolio are deeply disappointing, our evaluation thus far confirms that these losses weren’t the results of any failure within the portfolio’s funding technique or danger administration processes,” it stated.

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