Sullivan & Cromwell secured another win on behalf of Allianz SE and its U.S. subsidiary, Allianz Global Investors U.S. (AGI-US) in a case arising from one of the largest recent corporate criminal cases: the collapse of the Structured Alpha Funds, which lost more than $7 billion in value.
On June 27, a Ninth Circuit panel affirmed a district court’s decision to dismiss with prejudice all claims brought against Allianz SE and AGI-US by a putative class of ADR holders in Weir v. Allianz SE, et al. S&C represented Allianz in the district court.
The plaintiff sued after AGI-US pled guilty to securities fraud based on three rogue portfolio managers’ misrepresentations to investors in AGI US’s Structured Alpha Funds, which collapsed in 2020, leading to billions in investor losses. The SEC’s Director of Enforcement compared the scope of the fraud to that of Enron when discussing a $5.8 billion DOJ-SEC settlement with AGI-US. The plaintiff didn’t invest in any Structured Alpha Fund or any AGI-US securities, but instead purchased ADRs priced by reference to Allianz SE stock trading in Germany.
The Ninth Circuit agreed that Allianz SE’s statements were not false because “Allianz did have … [the] risk management system” described in its disclosures, and “the existence of that system did not guarantee its success.” The court further held that “fraud committed by specific AGI US employees does not show that Allianz [SE]’s statements were materially misleading.” Regarding AGI US, the Ninth Circuit affirmed that plaintiff’s claims against AGI US violated the “bright line” rule restricting securities fraud claims “to purchasers and sellers of the security about which the alleged misrepresentations were made.”
The S&C team included Robert Giuffra Jr. (who argued the appeal), William Torchiana, Adam Paris, Hilary Williams, Jacob Cohen, Emily Grasso and Morgan Knudtsen.