Federal prosecutors in Manhattan are scrutinizing billionaire Mark Walter's investment empire, including his insurance companies Delaware Life Insurance Co. and Clear Spring Life and Annuity Co., and Guggenheim Partners LLC. The investigation, which began last year, has expanded to include additional transactions involving Walter personally. Concurrently, the US Securities and Exchange Commission (SEC) has launched a parallel inquiry into Guggenheim's asset-management unit, focusing on specific real estate transactions, including an $85 million Malibu property co-owned by Walter and ABS Capital Co. LLC, and other deals involving ABS Capital.
The core of the investigation into the insurers involves whether they failed to properly characterize certain private credit investments as involving related parties. Following grand jury subpoenas received in February, an internal investigation by the companies uncovered "errors" in financial reporting. For instance, Delaware Life restated its private credit assets linked to affiliates, increasing its reported related party investments from $1.4 billion (3% of total invested assets) to at least $17 billion (at least 39% of total invested assets) as of December 31. This significantly higher figure for related party investments was previously undisclosed.
Mark Walter controls the insurers (Delaware Life with $69 billion in assets and Clear Spring with $16 billion) and has a stake in Guggenheim through his TWG Global holding company. His financial empire, managing over $362 billion in assets, also includes ownership stakes in the Los Angeles Dodgers, Los Angeles Lakers, and Chelsea soccer club. S&P Global Ratings lowered Delaware Life's outlook from "stable" to "negative" due to these disclosures, though its A- credit and financial strength rating was affirmed. Both Guggenheim and TWG Global have stated they are cooperating with the investigations.
