UNITED STATES OF AMERICA

UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934

Release No. 99494 / February 8, 2024

ADMINISTRATIVE PROCEEDING

File No. 3-20855

:

In the Matter of

:

:

Allianz Global Investors U.S. LLC, :

:

Respondent.

:

:

ORDER APPROVING AMENDED

PLAN OF DISTRIBUTION

On May 17, 2022, the Commission issued an Order Instituting Administrative and Ceaseand-Desist Proceedings Pursuant to Sections 15(b) and 21C of the Securities Exchange Act of

1934 and Sections 203(e) and 203(k) of the Investment Advisers Act of 1940, Making Findings,

and Imposing Remedial Sanctions and a Cease-and-Desist Order (the “Order”)1 against Allianz

Global Investors U.S. LLC (“AGI US” or the “Respondent”). In the Order, the Commission

found that AGI US employed a complex options trading strategy known as Structured Alpha that

AGI US marketed and sold to investors in various funds (“Structured Alpha Funds”). The

Structured Alpha Funds were intended to generate profits by using a portfolio of debt or equity

securities as collateral to purchase and sell options principally on the S&P 500 Index. The

Structured Alpha Funds performed well until the COVID-related market volatility in March 2020

when they suffered catastrophic losses, including losses in excess of 90% in certain funds.

Beginning on or before January 2016, and continuing through March 2020, AGI US, through the

Structured Alpha portfolio management team, misled investors as to the significant downside

risk of the Structured Alpha Funds, which included misrepresentations and omissions made in

connection with the purchase and sale of these securities. First, AGI US’s marketing materials

misrepresented to investors the levels at which hedging positions were put in place. Second, the

portfolio management team did not consistently implement a bespoke risk mitigation program

agreed to with the largest client in the Structured Alpha Funds. Third, the portfolio management

team manipulated reports and other information provided to or created for certain investors on an

ad hoc basis to conceal the magnitude of the strategy’s downside risk. In addition, the portfolio

management team misrepresented to investors that Structured Alpha had a capacity limit of $9

billion for certain funds when, in reality, it exceeded that amount by over $3 billion. After

COVID-related market volatility in March 2020, the portfolio management team engaged in

numerous, ultimately unsuccessful, efforts to conceal their misconduct from the Commission

staff. The Commission ordered the Respondent to pay $349,200,000 in disgorgement and

1

Exchange Act Rel. No. 94927 (May 17, 2022).

prejudgment interest, which was deemed satisfied by forfeiture and restitution ordered in

settlement of a parallel criminal proceeding. The Commission further ordered the Respondent to

pay a $675,000,000.00 civil money penalty and created a Fair Fund, pursuant to Section 308(a)

of the Sarbanes-Oxley Act of 2002, so the penalty paid can be distributed to harmed investors

(the “Fair Fund”). In accordance with the Order, the Respondent paid $131,314,739.08 directly

to certain investors and the remaining $543,685,260.92 to the Commission.

The Fair Fund includes the $543,685,260.92 paid by the Respondent. The assets of the

Fair Fund are subject to the continuing jurisdiction and control of the Commission. The Fair

Fund has been deposited in a Commission-designated account at the U.S. Department of the

Treasury, and any interest accrued will be added to the Fair Fund.

On December 28, 2023, the Commission published a Notice of Amended Proposed Plan

of Distribution and Opportunity for Comment (“Notice”),2 pursuant to Rule 1103 of the

Commission’s Rules on Fair Fund and Disgorgement Plans (“Commission’s Rules”);3 and

simultaneously posted the Amended Proposed Plan of Distribution (the “Amended Proposed

Plan”). The Notice advised interested persons that they could obtain a copy of the Amended

Proposed Plan from the Commission’s public website or by submitting a written request to Amy

Sumner, United States Securities and Exchange Commission, Byron Rogers Federal Office

Building, 1961 Stout Street, Suite 1700, Denver, CO 80294-1961. The Notice also advised that

all persons desiring to comment on the Amended Proposed Plan could submit their comments, in

writing, within 30 days of the Notice. The Commission received no comments on the Amended

Proposed Plan during the comment period.

The Amended Proposed Plan provides for the distribution of the Net Available Fair

Fund to distribution of the Net Available Fair Fund to investors who held eligible Securities

during the Relevant Period and suffered a Recognized Loss as calculated by the methodology

used in the plan of allocation in the Plan.

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The Division of Enforcement now requests that the Commission approve the Amended

Proposed Plan.

Accordingly, it is hereby ORDERED, pursuant to Rule 1104 of the Commission’s Rules,5

that the Amended Proposed Plan is approved, and the approved Amended Plan of Distribution

shall be posted simultaneously with this order on the Commission’s website at www.sec.gov.

By the Commission.

Vanessa A. Countryman

Secretary

2

Exchange Act Rel. No. 99253 (Dec. 28, 2023).

17 C.F.R. § 201.1103.

4

All capitalized terms used herein but not defined shall have the same meanings ascribed to them in the Amended

Proposed Plan.

5

17 C.F.R. § 201.1104.

3

2