After Losing Nearly $60 Million, the Getty Trust Is Suing Finance Giant Allianz for Allegedly Mismanaging Its Investment
The Getty and others allege that Allianz lied about its risk management strategy.
The J. Paul Getty Trust, which operates the Getty Center and Getty Villa in Los Angeles, is suing financial services giant Allianz after losing tens of millions of dollars as a result of alleged mismanagement of its investment fund.
Most financial investors in U.S. or international equity markets acknowledge the potential for volatility and accept the risk of losses. However, the Getty claims that Allianz abandoned the hedging strategy that was promised as the “cornerstone” of the fund, “leaving the portfolio almost entirely unhedged against a spike in market volatility,” according to the lawsuit, filed in the U.S. District Court for the Southern District of New York.
AllianzGI, a global investors division named in the lawsuit, allegedly assured investors that the hedges in place would contain losses to a “defined maximum loss,” and afford “protection” against a market crash, according to court papers.
The Getty invested $60 million in the fund, which was titled “structured alpha,” in 2016. Three years later, the investment had grown to $73 million. But in early 2020, when the pandemic hit, the fund suffered devastating losses: The Getty only had $2 million left, or “97 percent of its assets.”
The Getty said it had closely tracked Allianz’s structured alpha funds before investing and believed its approach fit well with the risk profile it sought.
Neither Allianz nor the Getty immediately responded to requests for comment.
The Getty said its endowment had approximately $9.2 billion in portfolio assets at the end of the calendar year.
Meanwhile, Allianz Group is said to be setting aside $4.2 billion to cover expected settlements with U.S. investors and government officials over the matter. The structured alpha funds eventually collapsed.
A dozen public pension funds and other institutional investors sued AllianzGI in 2020 for alleged mismanagement, including the Arkansas Teacher Retirement System, Raytheon Technologies, and Blue Cross Blue Shield’s national employee benefits committee.
The Justice Department and Securities and Exchange Commission have launched their own investigations.
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