United States prosecutors are investigating potential financial improprieties at two insurance companies and Guggenheim Partners, which are both headed by chief executive officer and Los Angeles Dodgers majority owner Mark Walter, according to Bloomberg.
Along with Guggenheim, investigators are looking into Walter’s Delaware Life Insurance Co. and Clear Spring Life and Annuity Co., Bloomberg reports. Walter controls the insurers and has a stake in Guggenheim through TWG Global holding company.
The probe includes both the Federal Bureau of Investigation and a parallel investigation with the U.S. Securities and Exchange Commission.
The investigation into Guggenheim’s money management began last year, according to Bloomberg, and the interest in the insurers began more recently, Zachary R. Mider and Ava Benny-Morrison reported for Bloomberg.
The investigation into the insurers revolves around whether they failed to properly characterize some of their private credit investments as involving related parties, the companies said in the June filing. After getting the subpoenas, the companies conducted an internal investigation and discovered “errors” in financial reporting, the companies said. This led them to reveal that they’re far more intertwined with other parts of Walter’s businesses than previously known.
The insurance companies are primarily responsible for retirement annuities and life insurance, and they invest their customers’ money to pay them down the line.
In layman’s terms, it is being investigated whether Walter’s insurers invested billions in private loans rather than buying them on the public market, whether the loans were connected to Walter’s own companies, and whether the insurers hid that information.
Customers have a right to know where their money is being invested, and regulators keep a close watch when insurers invest consumers’ money into their other companies, as conflicts of interest can arise between them and their policyholders.
Walter has not been accused of wrongdoing at this time, and investigations can conclude without charges or enforcement actions being taken. Similar cases rarely reach the court systems.
TWG Global and Group 1001, which is the parent company of both insurers, said in statements that they are cooperating with the investigation.
Mark Walter sports ownership affected by federal probe?
In addition to being the controlling owner of the Dodgers, Walter also recently completed a purchase of the L.A. Lakers. He is also the owner of the WNBA’s L.A. Sparks, Chelsea FC of the Premier League, the Cadillac Formula 1 team, and the entirety of the Professional Women’s Hockey League.
None of the teams are impacted by the investigations at the moment, and they very well may not be when it concludes. However, if Walter is charged with wrongdoing or crimes, it could force each league to decide whether Walter must sell the teams.
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