Allianz is reportedly facing an investigation by German financial watchdog BaFin over its US-based hedge fund business.

The regulator launched its own investigation into Allianz’s Structured Alpha Funds, which is at the centre of legal trouble in the US after falling into massive losses during the Covid-19 pandemic.

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The investigation by BaFin will examine to what extent the Allianz officials outside the Florida-based funds were aware of the events that caused losses, Reuters reported citing people with knowledge of the development.

The report says that the regulator will look into several departments of the institution to inspect the involvement of Allianz executives outside the fund division in the matter.

An Allianz spokesperson told the news agency that the company was in regular contact with BaFin on all matters, including Structured Alpha.

In the US, the US Department of Justice (DOJ) and Securities and Exchange Commission (SEC) are investigating Allianz after a slew of lawsuits has been filed by investors with regard to the funds.

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The funds, which were managed by Allianz Global Investors, served US pension funds for workers such as teachers and subway employees. It was also offered to European investors by the insurer.

Allainz closed two funds last March after they were hurt by losses from bad bets. These funds were valued $2.3bn at the end of 2019.

Investors, who alleged Allianz for deviating from its strategy of providing downside protection for market crashes, have filed 25 lawsuits claiming $6bn in damages.

Last month, the Chinese arm of the insurer received a regulatory nod to establish a wholly-owned insurance asset management firm in the country.

In July, Allianz Global Investors announced a plan to launch an OEIC version of its China A-shares fund, targeted at the UK retail market.