A former
Allianz SE
fund supervisor who was blamed for losses the agency suffered throughout a market meltdown sparked by the Covid-19 pandemic has accused federal prosecutors of committing moral breaches by turning his personal legal professionals in opposition to him.
Gregoire Tournant,
who was a chief funding officer for certainly one of Allianz’s U.S. investing divisions, stated prosecutors inspired legal professionals that had been appearing each for the agency and for him personally to later swap sides and use his privileged communications to assist construct a false narrative in opposition to him.
The accusations are a part of a movement filed by Mr. Tournant on Monday in New York federal court docket, in what constitutes his first substantive authorized problem to the securities and funding adviser fraud fees introduced in opposition to him final yr. He was arrested in Might and pleaded not responsible later that yr.
On the time of Mr. Tournant’s arrest, Allianz agreed to pay about $6 billion in penalties and restitution to buyers as a part of a cope with the federal government. The agency admitted to having poor inside controls however stated legal misconduct was restricted to a handful of people who now not labored on the firm.
Justice Division officers have pointed to the Allianz case for example of how they intend to crack down on company fraud. Mr. Tournant’s movement takes direct goal at that marketing campaign, saying it was prosecutors’ efforts to scare firms into cooperating with them that led the agency and its legal professionals to make use of him as a scapegoat.
The case is certainly one of a number of lately which have referred to as into query insurance policies on the Justice Division that supply rewards comparable to lenient therapy to firms that voluntarily disclose attainable wrongdoing and switch over proof on staff who could have been concerned.
In his transient, Mr. Tournant excerpted a slide containing images of himself and two different former Allianz executives, which his legal professionals likened to a most-wanted poster. The slide was a part of a presentation the corporate gave to the Justice Division previous to its settlement, wherein it argued that it shouldn’t be required to plead responsible to legal fees. As a part of its eventual cope with prosecutors, Allianz International Traders U.S. LLC, a U.S. subsidiary of the Munich-based Allianz, was required to plead responsible to securities-fraud fees.
“DOJ can have a powerful case in opposition to the wrongdoers, partly on account of AGI US’s cooperation,” the slide by the corporate’s legal professionals learn.
A grand jury indictment unsealed final yr charged Mr. Tournant and two different executives with defrauding the Allianz subsidiary and its buyers by understating the dangers to which investor belongings had been uncovered, together with by exaggerating the extent of oversight over their portfolio’s technique and fraudulently altering paperwork to cover its riskiness.
Trevor Taylor,
an govt who together with Mr. Tournant co-led the set of personal funds that collapsed amid the market upheaval in March 2020, and
Stephen Bond-Nelson,
a portfolio supervisor for these funds, final yr pleaded responsible to a variety of fees and admitted to participating within the scheme.
Mr. Tournant on Monday referred to as the narrative adopted by prosecutors “wildly deceptive,” however stated it wasn’t the main target of his movement. As a substitute, he argued that the authorized preparations made by Allianz throughout its investigation had led to a state of affairs the place his legal professionals had primarily develop into informants in opposition to him.
He has requested the choose overseeing the case to dismiss the fees in opposition to him in consequence, or to carry a listening to to find out the extent of prosecutors’ interactions along with his former legal professionals.
The breach described by Mr. Tournant allegedly arose on account of an association below which legal professionals from the companies Sullivan & Cromwell LLP and Ropes & Grey LLP agreed to characterize each Allianz and Mr. Tournant amid the investigations by the Justice Division and the U.S. Securities and Alternate Fee. Mr. Tournant was additionally represented by a 3rd agency that wasn’t collectively retained by Allianz, in response to his movement.
Sullivan & Cromwell and Ropes & Grey stated a joint illustration can be extra environment friendly, stated Mr. Tournant. The association seems to have been made at a time when each events anticipated that their authorized pursuits can be related. The companies’ agreements required them to tell Mr. Tournant within the occasion {that a} battle of curiosity arose, in response to his movement.
Allianz’s posture towards Mr. Tournant modified after Mr. Bond-Nelson broke ties with the agency’s protection group and started shifting blame to Mr. Tournant, in response to his transient. Firm legal professionals continued assembly with Mr. Tournant of their capability as his lawyer, however Sullivan & Cromwell had begun to conduct an investigation that may make them counsel to the federal government that he had dedicated wrongdoing, he stated.
Representatives for Allianz and Sullivan & Cromwell declined to remark. Ropes & Grey didn’t reply to a request for remark.
The pivot was a direct results of the insurance policies outlined lately by officers comparable to Deputy Legal professional Normal
Lisa Monaco,
in response to Mr. Tournant.
“These insurance policies left Allianz within the determined place of needing to scapegoat Mr. Tournant in an try to keep away from indictment, and so they coerced Mr. Tournant’s former counsel to activate one consumer as a way to save one other,” his legal professionals wrote Monday.
Write to Dylan Tokar at dylan.tokar@wsj.com
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