UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934 

Release No. 95801 / September 16, 2022

ADMINISTRATIVE PROCEEDING

File No. 3-20855

In the Matter of

Allianz Global Investors U.S. LLC,

Respondent.

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ORDER APPOINTING 

FUND ADMINISTRATOR AND 

SETTING ADMINISTRATOR’S 

BOND AMOUNT

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 “AGI US” or “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 

 

1

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

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 $349.2 million 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 monies paid to the 

Commission have been deposited in an interest-bearing account at the U.S. Department of the 
3

Treasury’s Bureau of the Fiscal Service, and any accrued interest will be for the benefit of the 

Fair Fund.

The Division of Enforcement now seeks the appointment of Epiq Class Action & Claims 

Solutions, Inc. (“Epiq”) as the fund administrator and requests that the administrator’s bond be 

set at $543,685,260.92. Epiq is included in the Commission’s approved pool of administrators.

Accordingly, IT IS HEREBY ORDERED that Epiq is appointed as the fund 

administrator, pursuant to Rule 1105(a) of the Commission’s Rules on Fair Fund and 

Disgorgement Plans (“Commission’s Rules”),2and shall obtain a bond in accordance with Rule 

1105(c) of the Commission’s Rules,3in the amount of $543,685,260.92.

For the Commission, by the Division of Enforcement, pursuant to delegated authority.4

Vanessa A. Countryman

Secretary 

 

2

 17 C.F.R. § 201.1105(a).

3

 17 C.F.R. § 201.1105(c).

4

 17 C.F.R. § 200.30-4(a)(17).