Key Takeaways:
Federal prosecutors and the SEC are investigating whether Mark Walter concealed connections on about $20 billion in insurer loans that funded his own businesses.
"We have always acted in good faith, and insinuations that we have in any way attempted to circumvent our obligations is simply false," TWG Global, Walter's holding company, said.
Internal reviews by Walter's insurers, Delaware Life and Clear Spring Life & Annuity, found about $20 billion in private-credit deals weren't properly disclosed to regulators as going to borrowers ultimately linked to Walter. The loans passed through entities controlled by four intermediaries — ABS Capital, Amistad Financial, Bradford Allen and Hudson Trading — which federal prosecutors have zeroed in on, the Journal reported.
Rich Moore, a longtime lieutenant who has worked for three Walter businesses over an 18-year association, arranged for the four businesses to set up entities for the financings and presented the loans to the insurance side, according to people familiar with the matter. Moore joined Guggenheim Partners in 2008, spent nearly 14 years there, then moved to Group 1001, the subsidiary overseeing the two insurers, before becoming executive vice president at TWG Global in early 2023.
Lending to affiliate entities — those with ties to the insurer's owner — is allowed as long as the loans are disclosed and don't exceed certain limits. Delaware Life initially reported affiliated investments at roughly 3 percent of its portfolio; after internal reviews prompted by the investigation, the company found an additional $17 billion in funds misclassified as unaffiliated, bringing the share to 42 percent.
The fallout has spread across Walter's empire. TWG agreed to swap $6.5 billion of unaffiliated assets into Delaware Life to shrink the affiliated loan list, and Clear Spring separately cut related transactions by $90 million. Walter struck a deal to sell his stake in the Los Angeles Lakers for $12.5 billion and is in talks to unload his investment in Chelsea, the English soccer club. Traders sold down debt issued by Guggenheim, Walter's financial firm, and Sammons, an early Walter backer, while shares of Carvana, a Walter investment, fell sharply before recovering.
S&P Global Ratings changed its outlook on Delaware Life from stable to negative after the insurer restated its private-credit investments. The investigation, led by the U.S. Attorney's Office for the Southern District of New York with a parallel SEC probe, centers on whether Walter committed fraud by concealing the connections between his insurers and the businesses they funded.
The restructuring deals require regulatory approval, and Walter has not been charged with a crime. Investors will watch whether the asset swaps satisfy regulators and whether further divestitures follow as the probe deepens.
This article is for informational purposes only and does not constitute investment advice.
