UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934 

Release No. 97540 / May 22, 2023

ADMINISTRATIVE PROCEEDING

File No. 3-20855

In the Matter of

Allianz Global Investors U.S. LLC,

Respondent.

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NOTICE OF PROPOSED PLAN OF 

DISTRIBUTION AND 

OPPORTUNITY FOR COMMENT

Notice is hereby given, pursuant to Rule 1103 of the United States Securities and Exchange 

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

Rules”), 17 C.F.R. § 201.1103, that the Division of Enforcement has submitted to the Commission a 

proposed plan of distribution (the “Proposed Plan”) for the distribution of monies paid in the abovecaptioned matter.

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”)1against Allianz Global 

Investors U.S. LLC (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 

 

1

 Exchange Act Rel. No. 94927 (May 17, 2022).
2

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. In March 2020, AGI US began the process of liquidating the largest Structured 

Alpha Funds, paying to shareholders a liquidation price per share specific to each fund. 

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

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.

OPPORTUNITY FOR COMMENT

Pursuant to this Notice, all interested persons are advised that they may obtain a copy of the 

Plan from the Commission’s public website at http://www.sec.gov/litigation/fairfundlist.htm. 

Interested persons may also obtain a written copy of the Proposed Plan by submitting a written 

request to Amy A. Sumner, United States Securities and Exchange Commission, Byron Rogers 

Federal Office Building, 1961 Stout Street, Suite 1700, Denver, CO 80294-1961. All persons who 

desire to comment on the Proposed Plan may submit their comments, in writing, no later than thirty 

(30) days from the date of this Notice:

1. to the Office of the Secretary, United States Securities and Exchange Commission, 

100 F Street, NE, Washington, DC 20549-1090;

2. by using the Commission’s Internet comment form 

(http://www.sec.gov/litigation/admin.shtml); or

3. by sending an e-mail to rule-comments@sec.gov.

Comments submitted by email or via the Commission’s website should include “Administrative 

Proceeding File No. 3-20855” in the subject line. Comments received will be publicly available. 

Persons should submit only information they wish to make publicly available.
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THE PROPOSED PLAN

The Net Available Fair Fund2is comprised of the $543,685,260.92 in civil money penalties 

paid by the Respondent, plus interest and income earned thereon, less taxes, fees, and expenses. The 

Proposed Plan provides for the distribution of the Net Available Fair Fund to investors who held 

mutual funds or UCITS funds, where AGI US employed the Structured Alpha options trading 

strategy, between February 24, 2020 and March 30, 2020, inclusive, and suffered a principal loss, as 

calculated by the methodology used in the plan of allocation in the Plan.

For the Commission, by the Division of Enforcement, pursuant to delegated authority.3

Vanessa A. Countryman

Secretary 

 

2

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

3

 17 C.F.R. § 200.30-4(a)(21)(iii).