Sharpe denies Aon’s allegations and says the lawsuit is baseless. His lawyers also say Aon is trying to take advantage of the fact that Sharpe, who’s in his late 60s, is fighting cancer.

“As Aon and its counsel knew when they sued him, Mr. Sharpe is undergoing treatment for advanced cancer and would prefer to focus on his health rather than responding to Aon’s abusive, unnecessary, and baseless attempt to shift the blame for their bad advice on Structured Alpha personally to him,” Sharpe’s attorney, Sean Gallagher, said in a statement to Bloomberg.

‘Catastrophic Losses’
The Blue Cross and Blue Shield Association National Employee Benefits Committee sued Allianz and Aon in 2020, after Structured Alpha plunged during the market mayhem of the early pandemic. The committee claimed Aon touted Structured Alpha as late as 2019 as one of its “highest conviction strategies,” even as it failed to properly monitor the Allianz funds or find fraud under its nose.

“Aon never alerted the committee that Allianz had strayed from the hedging strategy that should have been in place, leaving the portfolio exposed to catastrophic losses,” Blue Cross claimed. “Instead, Aon repeatedly (and falsely) described Structured Alpha as operating just as Allianz said it would.”

Blue Cross claimed Aon failed to monitor Allianz and “obscured the truth from the committee that the entire investment could be at risk.” Aon advisers gave the committee written analyses in 2011, 2013 and again in 2018 putting “buy” recommendations on Structured Alpha, Blue Cross claimed. It said Aon’s advice was a “primary basis” for its investment decisions.

In its May 17 lawsuit against Sharpe, Aon alleges he “masterminded and aggressively promoted” the investments in Structured Alpha. It also alleges Sharpe withheld information, including details about how Allianz had created funds solely for Blue Cross’s benefit, according to the court filing.

‘Like a Salesman’
“Instead of acting like a trusted fiduciary, he acted like a salesman,” Aon said of Sharpe. Aon filed a similar complaint against Blue Cross and Blue Shield Association on May 27.

Whatever the case, Blue Cross invested in the funds to an extraordinary degree. In 2013, it had 4.6% of its pension money in Structured Alpha. By late 2016, that figure had jumped to 62%, according to the Aon court filings.

Aon, in its suit, goes further. It claims Sharpe fired a senior employee who challenged “his authority over Structured Alpha and replaced her with more junior subordinates whom he kept in the dark about Structured Alpha and its risks.” He allegedly told Aon that for Structured Alpha, “the buck stopped with him.”

Aon also has sued Terrence Cooney, Sharpe’s superior, claiming he breached his fiduciary duty by failing to supervise Sharpe.