Written by Luc Cohen
NEW YORK – A former Allianz (ETR: ) fund manager was spared jail time Friday for his role in the collapse of private equity funds caused by the COVID-19 pandemic that caused $7 billion in losses.
Gregoire Tournant, 57, of Basalt, Colorado, pleaded guilty to two counts of investment adviser fraud in June. He agreed to forfeit $17.5 million in ill-gotten gains, including bonuses raised by his fraud.
Chief Judge Laura Taylor Swain of federal court in Manhattan sentenced him to 18 months of house arrest and three years.
Tournant’s attorneys pleaded with Swain not to be arrested, citing health issues. They also said Tournant expressed remorse, saying the case was less serious than a typical investment adviser fraud scheme.
“We are very grateful to the Court for issuing this fair sentence and finding that imprisonment was not appropriate in this case,” said the defendants’ lawyers, Seth Levine and Daniel Alonso, in a statement.
Prosecutors from the U.S. Attorney’s office in Manhattan recommended that Tournant be sentenced to at least seven years in prison. They said more than 100 Tournant investors lost billions of dollars when it collapsed, and he continued to downplay the value of what he had done.
The case stems from the March 2020 collapse of the now-defunct German insurer Structured Alpha, which Tournant founded and oversaw as chief investment officer.
In May 2022, Allianz agreed to pay more than $6 billion and its US asset management unit pleaded guilty to securities fraud to resolve a federal investigation into the collapse. Two other Allianz fund managers pleaded guilty at the time.
Structured Alpha funds were heavily betting on stock options, in a way designed to limit losses in a selloff market, which Tournant likened to a type of insurance.
Prosecutors say Tournant misled investors about financial risks by altering performance data and deviating from his promised hedge strategy, and obstructed a U.S. Securities and Exchange Commission investigation by ordering a colleague to lie.
These funds once had more than $11 billion in assets under management, but lost nearly $7 billion in February and March 2020 as the onset of the pandemic began to panic global markets.
Prosecutors say the fraud ran from 2014 to March 2020, and Tournant was paid more than $60 million during that time.
