Allianz CIO Tournant Admits Investment Fraud

NEW YORK, NY – Gregoire Tournant, 57, of Basalt, Colorado, finally admitted guilt today in a brazen scheme that cost investors over $7 billion. The former chief investment officer of Allianz Global Investors U.S. LLC (AGI) pleaded guilty to investment adviser fraud, admitting to deliberately misleading investors about the true risks lurking within the Structured Alpha Funds.

The guilty plea, entered before U.S. District Judge Laura Taylor Swain, marks a significant escalation in a multi-year federal investigation spearheaded by U.S. Attorney Damian Williams for the Southern District of New York. Tournant, along with co-conspirators at AGI, systematically altered risk reports, concealing the funds’ lack of sufficient hedging against a market downturn. The deception was exposed in March 2020, when the COVID-19 pandemic triggered a catastrophic collapse, wiping out over $3.2 billion in principal and forcing the funds to shutter.

“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,” Williams stated bluntly. “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.” The victims included pension funds representing the hard-earned savings of workers across the United States.

This isn’t a lone conviction. AGI itself previously copped a plea to securities fraud on May 17, 2022, and was slapped with a staggering penalty: a $2.3 billion criminal fine, $463 million in forfeited assets, and over $3 billion in restitution to defrauded investors. Tournant’s accomplices, Trevor Taylor and Stephen Bond-Nelson, previously entered guilty pleas on March 8, 2022, and March 3, 2022, respectively. The scale of the deception points to a systemic failure of oversight within AGI.

Tournant faces a maximum sentence of five years in prison on each of the two counts of investment adviser fraud. As part of his agreement, he’ll also forfeit approximately $17 million in compensation tied to the fraudulent activity. Sentencing is scheduled for October 16, 2024. While the maximum sentence is set by Congress, the final decision rests with Judge Swain. This case serves as a stark reminder that even the most complex financial schemes will be brought to light.

Williams commended the U.S. Postal Inspection Service and the Special Agents of the U.S. Attorney’s Office for their relentless work. He also acknowledged the Securities Exchange Commission’s prior civil action against Tournant. The prosecution is being handled by Assistant U.S. Attorneys Margaret Graham, Nicholas Folly, Allison Nichols, Thomas Burnett, Sarah Mortazavi, and Nicolas Roos of the Office’s Securities and Commodities Fraud Task Force. The investigation remains ongoing, and further indictments are not being ruled out.