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Allianz Securities fraud resurfaces amidst Singaporean concerns over Income Insurance sale

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Allianz Global Investors (AGI), a US division of the German insurance giant Allianz, was sentenced in July 2023 by US District Judge Colleen McMahon for a multi-year securities fraud involving private investment funds.

The judgement, which follows AGI’s guilty plea, imposed financial penalties exceeding US$6 billion.

This news has recently resurfaced among Singaporean netizens in private chat groups, coinciding with the impending sale of majority shares (51%) of Income Insurance, formerly NTUC Income, to Allianz, sparking public backlash.

Significant Judgement Outcome

In a press statement, US Attorney Damian Williams highlighted AGI’s failure to uphold its duty to investors, stating, “AGI violated that central tenet and deceived investors by materially understating the risk to which their assets were exposed. This sentence should send a message to the industry: companies will be held responsible when they fail to implement safeguards and ensure that they uphold their duties to investors.”

Background of the Fraud Scheme

The settlement is one of the largest in corporate history and involves both the US Department of Justice (DOJ) and the US Securities and Exchange Commission (SEC).

According to US investigators, AGI manipulated investors to place US$11 billion into complex funds known as “Structured Alpha,” which collapsed during the COVID-19 pandemic market downturn in March 2020.

The scheme involved misleading investors about the risk levels and altering documents to present the funds as safer than they were. As a result, AGI collected approximately US$550 million in fees from these funds.

AGI, a subsidiary of Allianz SE, one of the world’s largest financial services firms with over US$2 trillion in assets under management, admitted to federal fraud charges as part of the settlement.

Three of AGI’s portfolio managers, including former Chief Investment Officer Gregoire Tournant, faced criminal charges.

Tournant was indicted for conspiracy, securities fraud, and obstruction of justice, while two other managers, Stephen Bond-Nelson and Trevor Taylor, pleaded guilty to securities fraud in February.

Legal and Financial Repercussions

The court imposed financial penalties exceeding US$6 billion, including over US$463 million in forfeiture, more than US$3.23 billion in restitution, and over US$2.33 billion in fines.

These penalties include restitution to the victims and the forfeiture of dividends paid to AGI’s corporate parent, traceable to the fraudulent activities.

Impact on Investors

The fraudulent scheme affected more than 100 institutional investors, including pension funds for teachers, religious organizations, and other charitable entities.

These funds were exposed to higher risks than promised, leading to significant financial losses during the market sell-off in March 2020.

According to the U.S. Attorney’s Office, AGI’s misconduct deprived investors of crucial information about the true risks to which their investments were exposed.

Allianz’s Response and Future Operations

Allianz has stated that the criminal misconduct was perpetrated by a few individuals who no longer work for the company.

As part of the settlement, Allianz is barred from performing advisory services for certain funds in the US.

The company announced a preliminary agreement to transfer the management of about US$120 billion in assets to Voya Financial.

Singaporean Backlash over Impending Sale of Income Insurance

NTUC Income, established in 1970, was created to provide insurance protection to the masses at a time when life insurance was primarily accessible only to the higher-income group.

In January 2022, NTUC Income announced plans to convert its legal structure from a co-operative to a company governed by the Companies Act. It was turned into Income Insurance on 1 September 2022.

Allianz announced on 17 July its intention to purchase 51% of Income Insurance’s shares, offering S$40.58 (US$30.20) per share, with a transaction value of S$2.2 billion.

NTUC Enterprise, currently holding a 72.8% stake in Income Insurance, will remain a substantial shareholder—but a minority—if the sale proceeds.

The re-emergence of the news about AGI’s prosecution reflects public concerns over Allianz’s integrity and the potential implications for local investments, as well as the interests of ordinary shareholders and policyholders if the sale of Income shares goes through.

The post Allianz Securities fraud resurfaces amidst Singaporean concerns over Income Insurance sale appeared first on Gutzy Asia.

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Man arrested for alleged housebreaking and theft of mobile phones in Yishun

A 23-year-old man was arrested for allegedly breaking into a Yishun Ring Road rental flat and stealing eight mobile phones worth S$3,400 from five tenants. The Singapore Police responded swiftly on 1 September, identifying and apprehending the suspect on the same day. The man has been charged with housebreaking, which carries a potential 10-year jail term.

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SINGAPORE: A 23-year-old man has been arrested for allegedly breaking into a rental flat along Yishun Ring Road and stealing eight mobile phones from five tenants.

The incident occurred in the early hours on Sunday (1 September), according to a statement from the Singapore Police Force.

The authorities reported that they received a call for assistance at around 5 a.m. on that day.

Officers from the Woodlands Police Division quickly responded and, through ground enquiries and police camera footage, were able to identify and apprehend the suspect on the same day.

The stolen mobile phones, with an estimated total value of approximately S$3,400, were recovered hidden under a nearby bin.

The suspect was charged in court on Monday with housebreaking with the intent to commit theft.

If convicted, he could face a jail term of up to 10 years and a fine.

In light of this incident, the police have advised property owners to take precautions to prevent similar crimes.

They recommend securing all doors, windows, and other openings with good quality grilles and padlocks when leaving premises unattended, even for short periods.

The installation of burglar alarms, motion sensor lights, and CCTV cameras to cover access points is also advised. Additionally, residents are urged to avoid keeping large sums of cash and valuables in their homes.

The investigation is ongoing.

Last month, police disclosed that a recent uptick in housebreaking incidents in private residential estates across Singapore has been traced to foreign syndicates, primarily involving Chinese nationals.

Preliminary investigations indicate that these syndicates operate in small groups, targeting homes by scaling perimeter walls or fences.

The suspects are believed to be transient travelers who enter Singapore on Social Visit Passes, typically just a day or two before committing the crimes.

Before this recent surge in break-ins, housebreaking cases were on the decline, with 59 reported in the first half of this year compared to 70 during the same period last year.

However, between 1 June and 4 August 2024, there were 10 reported housebreaking incidents, predominantly in private estates around the Rail Corridor and Bukit Timah Road.

The SPF has intensified efforts to engage residents near high-risk areas by distributing crime prevention advisories, erecting alert signs, and training them to patrol their neighborhoods, leading to an increase in reports of suspicious activity.

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Consumers Association of Singapore fined S$20,000 for PDPA breaches following two data security incidents

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The Consumers Association of Singapore (CASE) has been fined S$20,000 by the Personal Data Protection Commission (PDPC) for breaches under the Personal Data Protection Act (PDPA).

According to a judgement which was published on 28 August, the fine was imposed due to the consumer watchdog’s failure to implement reasonable security measures to protect the personal data in its possession and to establish necessary policies and practices required under the PDPA.

The breaches resulted in two significant incidents, one in October 2022 and another in June 2023, where the personal data of up to 34,760 individuals was potentially compromised.

Both incidents were handled under the Expedited Decision Procedure (EDP) at the request of CASE, with the organization admitting to all the facts and contraventions of the PDPA, leading to a faster resolution of the case.

The First Incident: Phishing Attack in October 2022

The first incident occurred in October 2022 when a threat actor accessed CASE’s email accounts and sent phishing emails from its official email addresses.

On 8 October 2022, some consumers received unsolicited emails from “[email protected],” which falsely claimed that their complaints had been escalated to the “collections and compensation department” and that they were eligible for compensation.

The recipients were asked to provide their banking details by clicking on a chat icon.

The following day, similar phishing emails were sent from “[email protected],” an account used for complaints that had progressed to mediation. CASE later discovered that the phishing emails had affected up to 22,542 email addresses.

Further investigations revealed that the phishing emails likely resulted from the threat actor obtaining login credentials from a CASE employee via a phishing attack.

The compromised accounts led to the sending of 5,205 phishing emails to 4,945 recipients. Although CASE acted swiftly to suspend the affected accounts and reset all administrator passwords, three consumers reported that they had clicked on the phishing links and collectively lost S$217,900. CASE subsequently lodged a police report.

The Second Incident: Data Breach During Vendor Migration

While PDPC was investigating the first incident, a second breach came to light in June 2023. On 22 June 2023, PDPC received a complaint about a phishing email that replicated a consumer’s complaint previously submitted to CASE.

This led to the discovery that the personal data of 12,218 individuals, including names, email addresses, contact numbers, and complaint details, had been exposed. The PDPC concluded that the breach likely occurred during a data migration exercise conducted by CASE between December 2019 and January 2020 when CASE switched vendors.

Investigations revealed that CASE’s contract with one of its vendors, Total eBiz Solutions Pte Ltd (TES), did not stipulate clear security responsibilities. This lack of contractual clarity contributed to the data breach during the migration process, highlighting CASE’s negligent vendor management.

PDPC Findings and Penalties

The PDPC found that CASE had failed to enforce its password management policy, with some passwords not meeting minimum length and complexity requirements and others remaining unchanged for up to four years. Furthermore, CASE’s vendor management was deemed negligent, as one of its contracts did not specify clear security responsibilities, putting personal data at risk.

CASE admitted to not conducting regular security awareness training for its staff, with the last session held five years before the first incident.

The PDPC also noted that CASE lacked an Information and Communications Technology (ICT) policy, particularly in relation to patching and maintaining IT systems. The absence of a documented IT infrastructure management plan, insufficient logging and monitoring practices, and the lack of security reviews over the three years preceding the first breach were significant failures highlighted in the judgment.

In assessing the financial penalty, the PDPC considered the nature and gravity of the breaches, the duration of non-compliance, and CASE’s annual turnover. The fine of $20,000 was determined to be appropriate in light of these factors.

Remedial Actions by CASE

It is said that CASE, which is headed by Mr Melvin Yong, People’s Action Party Member of Parliament for Radin Mas, has implemented several measures to enhance its cybersecurity in response to the breaches.

These include introducing multi-factor authentication for all web-based applications, strengthening password complexity requirements, decommissioning end-of-life devices, and implementing patch management software for security updates.

CASE has also revised its contracts with outsourced vendors to include data protection clauses and mandated annual data protection training for all staff members.

CASE is working towards obtaining the Cyber Essentials Mark and the Data Protection Trust Mark to reinforce its commitment to safeguarding personal data and complying with PDPA obligations.

The PDPC has directed CASE to review and update its data protection policies, rectify all identified security gaps, and report back within one week of completion. The organization has also been instructed to conduct a penetration test after addressing the vulnerabilities to ensure no further security gaps exist.

The post Consumers Association of Singapore fined S$20,000 for PDPA breaches following two data security incidents appeared first on Gutzy Asia.

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