Mark Walter Fraud Investigation VERTICAL [rGIwpNxKBXo]
According to the Wall Street Journal, federal prosecutors in the Southern District of New York and the Securities and Exchange Commission are examining whether $16 billion in loans from two Delaware life insurers Walter owns were improperly directed to companies tied to him and his TWG Global holding company without being disclosed as related-party transactions. Those disclosures are required to limit conflicts of interest and protect policyholders. One of the insurers, Delaware Life, had previously reported affiliated investments of about $1 billion, or 3% of its portfolio, then revised that figure to $16 billion. The companies said they received grand jury subpoenas in February, and S&P Global lowered its outlook on Delaware Life to negative. The probe reportedly began with an internal whistleblower complaint, and FBI agents seized at least one cellphone. Walter, the CEO of Guggenheim Partners, used insurance-backed financing to help fund the record $2.15 billion Dodgers purchase in 2012 and a controlling stake in the Lakers at a $10 billion valuation last year. He also owns Chelsea in the English Premier League. The insurers say they are now restructuring some related-party loans and tightening internal controls to reassure policyholders. A TWG spokesperson said Walter and TWG "have always acted in good faith," are cooperating with authorities, and are "confident these matters will be resolved favorably." Investigations by prosecutors and securities regulators often result in no action.