A former portfolio manager for Allianz SE claims his lawyers at Sullivan & Cromwell LLP betrayed him to secure a favorable deal for the German financial services firm.
On January 30, 2023, Gregoire Tournant filed a letter with Judge Laura Taylor Swain of the U.S. District Court for the Southern District of New York claiming that Tournant’s lawyers abused his attorney-client relationship by disclosing confidential communications with him to prosecutors.
The government accused Allianz Global Investors US LLC (“AGI”), a subsidiary of Allianz SE, of mismanaging private investment funds by falsely claiming that the funds were protected against market crashes. The government claims that AGI’s misconduct caused the funds to lose over $7 billion during the COVID-19 pandemic.
Last May, AGI pled guilty to securities fraud and Allianz SE agreed to pay more than $6 billion to resolve the claims raised in the federal investigation. But rather than accept a guilty plea, Tournant claims that Allianz SE conspired with prosecutors to build a case against him for fraud, conspiracy, and obstruction of justice.
Tournant claims that Sullivan & Cromwell, which previously represented both Tournant and Allianz SE, relayed confidential statements he made to firm attorneys while he was preparing for his SEC testimony to the Manhattan U.S. Attorney’s Office. According to Tournant’s filing, “counsel made the choice to misuse their attorney-client relationship with Mr. Tournant to obtain additional statements from him about the subject matter of this case, which they subsequently disclosed to the government” to benefit Allianz SE.
Tournant places as much blame on Sullivan & Cromwell as he does on the DOJ’s corporate enforcement policies, which he claims incentivize companies to sacrifice their employees to remain eligible for cooperation credit. He argues that Sullivan & Cromwell’s conduct “is a direct consequence of the coercive pressure of the government’s corporate cooperation policies placed on Allianz.” Tournant seeks a dismissal of the government’s case or, at the very least, a hearing to probe the extent of Sullivan & Cromwell’s wrongdoing.
Tournant’s filing shows the conflict target companies and their counsel face in selecting counsel for witnesses who work for the company. If the elect to use company counsel, they (and their outside counsel) risk a claim that counsel disclosed confidential information obtained from the employee or otherwise breached their duty of loyalty to the employee, who is also a client of the firm. For this reason, companies typically retain separate counsel for employees and former employees who are called as witnesses. For the same reasons, executives in most instances should insist that their employers provide independent counsel for them and provide indemnity under state law and the company’s D&O policies.