The German insurer Allianz has agreed to pay 6,000 million dollars (5,690 million euros) with the aim of settling the investigation by the United States Securities and Exchange Commission (SEC) of a multimillion-dollar fraud that committed in a series of funds called ‘Structured Alpha’.

As reported by the financial regulator in a statement, Allianz Global Investors will pay the SEC 1,000 million dollars (949 million euros) to settle the investigation. The subsidiary, together with the German parent company, will pay another 5,000 million dollars (4,745 million euros) to compensate the victims of the fraud.

In a statement, Allianz has indicated that it has pleaded guilty to the fraud and has stressed that those responsible for the ‘Structured Alpha’ funds no longer work for the company.

Funds under the ‘Structured Alpha’ umbrella followed a complex options trading strategy that involved “immense” downside risks. These funds were marketed to 114 institutional investors, including pension funds for teachers, bus drivers, engineers and religious personnel.

These funds invested 11,000 million (10,440 million euros) in Structured Alpha. Three Allianz portfolio managers manipulated financial reports and other information provided to investors to hide the risk and return of the traded funds.

The SEC explains that in a risk report sent to investors, the managers decided to report a drop of 4.15%, instead of the 42.15% that had been registered (eliminating the digit ‘2’). On another occasion, the managers reported a drop of 9.26%, instead of the 18.26% that had been recorded (halving the integer part of the number).

“From at least June 2016 through March 2020, the defendants lied about virtually every aspect of a highly complex investment strategy that they marketed to institutional investors,” said SEC Enforcement Division Director Gurbir Grewal. Over the years, Allianz collected 550 million (522 million euros) in commissions for the management of these funds.

Due to this case, Allianz Global Investors has been “automatically” and “immediately” excluded from advisory services for US investment funds for the next ten years. To avoid problems with investors, the SEC will allow a transition period for clients to move to another investment adviser.

For this reason, Allianz has reached an agreement with Voya Financial to transfer its entire asset management business in the country, which encompasses 120,000 million (113,908 million euros) in assets under management. In exchange, Allianz will receive a 24% stake in Voya Financial.

After the operation, Voya will have assets under management valued at 370,000 million dollars (351,218 million euros).