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It is one thing when a disgruntled investor sues you over massive hedge-fund losses suffered amidst the short-lived but still very serious bout of coronavirus suffered by the markets last March. It is another when those disgruntled investors and their lawsuits take the form of the plural. And it is still another when the Securities and Exchange Commission gets involved. But it truly is a whole other ballgame when the Justice Department decides to have a look, as it has done vis-à-vis Allianz’s Structured Alpha funds, which were broadly wiped out by the sniffle-induced swoon.

The Justice Department’s interest in the case raises the stakes for Allianz and the asset-management division whose stock-options trades racked up huge losses when the market swung violently in early 2020. Stocks soon recovered, but not before Allianz Global Investors moved to liquidate two of its funds, locking in losses for their investors.

Shares in Allianz were down more than 7% early Monday. If sustained, the decline would be the company’s biggest one-day share price loss since the early days of the Covid-19 pandemic in March 2020…. S&P Global Ratings on Monday said it believes potential costs related to the DOJ investigation “could be substantial and might lead us to reconsider our view of the group’s earnings or capitalization.”

Allianz Shares Sink on DOJ Investigation Into Structured Alpha Funds [WSJ]

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