Allianz Cooperator Used Bathroom Break to Run Out on the SEC

Greg Farrell, Bloomberg News

An illuminated Allianz SE logo on the company's offices at dawn in the La Defense business district in Paris. Photographer: Benjamin Girette/Bloomberg , Bloomberg

(Bloomberg) -- A former portfolio manager for the Allianz SE unit that agreed to pay $5.8 billion over the implosion of its hedge funds in 2020 saw no escape from the questioning of the SEC’s lawyers.

So Stephen Bond-Nelson excused himself to use the bathroom and never returned.

At least, not until he decided to plead guilty and cooperate in the investigation of the fraud.

The U.S. Securities and Exchange Commission was the first to figure out that it wasn’t just the Covid-19 stock market plunge that led to the collapse of Allianz Global Investors’ Structured Alpha Funds, but also fund managers who allegedly deceived investors and regulators about Structured Alpha’s risk.

Read more: Allianz Fund Collapse Ends With Guilty Plea, $5.8 Billion Payout

SEC Director of Enforcement Gurbir Grewal recounted the world’s longest bathroom break at a press conference Tuesday at which criminal charges against Allianz and the funds’ former chief investment officer, Gregoire Tournant, were announced. The key to identifying the misconduct, according to Manhattan U.S. Attorney Damian Williams, was the SEC’s detective work.

Tournant and Bond-Nelson “were under the mistaken impression that the SEC staff were moving too quickly and as a result might not have put all the pieces together,” Grewal said. “So they came up with cover stories that Bond-Nelson would tell the SEC enforcement staff during his testimony. They couldn’t have been more wrong.”

Grewal said that “after Bond-Nelson lied on the record, SEC enforcement staff confronted him on his lies. Realizing that the gig was up, Bond-Nelson took a restroom break during his testimony and he never came back.”

Until, upon further reflection, he did.