CNBC3 hours agoBusiness2 min read

Truist and Fifth Third Pause Sales of Delaware Life Products Amid Federal Probe

Quick Look

Truist Financial Corp. and Fifth Third Bancorp have paused selling products of Mark Walter's Delaware Life due to federal investigations into how the insurer's parent company reported $20 billion in affiliated assets.
The probe, involving the U.S.
Attorney's Office in Manhattan and the SEC, follows a regulatory filing showing Delaware Life revised its affiliated assets from 3% to 42% after receiving grand jury subpoenas.

AI-generated summary

Why It Matters

Mark Walter, owner of the Los Angeles Dodgers, controls TWG Global, which owns Delaware Life and Clear Spring Life and Annuity. Federal prosecutors and the SEC are investigating how these entities reported approximately $20 billion in assets affiliated with other Walter-controlled companies. The investigation intensified after Walter's agreement to sell his majority stake in the Los Angeles Lakers.

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Two banks have paused selling products of Mark Walter's Delaware Life amid concerns of federal probes into how the insurer's parent company reported about $20 billion in assets that were affiliated with other entities controlled by the billionaire Los Angeles Dodgers owner, CNBC has confirmed.

The pause by the banks, Truist Financial Corp. and Fifth Third Bancorp, came to light Friday, two days after Walter's holding company, TWG Global, issued a statement saying "there has been no fraud" at Delaware Life and its affiliated company, Clear Spring Life and Annuity.

Bloomberg first reported the pause. A person familiar with the situation confirmed the pause by the banks to CNBC, speaking on condition of anonymity because it hasn't been announced.

That person said Delaware Life is continuing to meet with both banks to support existing contracts and to discuss trends in the insurance sector. The person said Delaware Life is also keeping the banks apprised of its effort to reduce the level of affiliated-party assets.

Truist has a longstanding business relationship with Delaware Life. Fifth Third only began doing business with the insurer in April, according to the person familiar.

"Our communications with key distribution partners remain open and cooperative," a spokesperson for Delaware Life told CNBC.

Fifth Third declined to comment. Truist did not immediately respond to a request for comment.

The U.S. Attorney's Office in Manhattan and the Securities and Exchange Commission are investigating Delaware Life and Clear Spring, Delaware Life said in a regulatory filing.

Last September, FBI agents seized Walter's phone and computer pursuant to a warrant they executed aboard a private plane in Chicago as part of a probe of his businesses, news outlets have reported.

Both Delaware Life and Clear Spring received grand jury subpoenas in February in connection with the probes, Delaware Life said in the regulatory filing.

In a review of its affiliated- and related-party disclosures conducted after receiving the subpoenas, Delaware Life revised the share of its total invested assets classified as affiliated with other Walter companies from 3% to 42%.

The probes gained widespread attention after Walter agreed to sell his majority stake in the Los Angeles Lakers earlier this month, less than a year after buying the team.

What to Watch

AI outlook — possibilities, not facts

The U.S. Attorney's Office in Manhattan and the SEC will issue formal findings or take enforcement action against Delaware Life, Clear Spring, or TWG Global within the next 3-6 months.
Likely · Within months
Delaware Life will continue to engage with Truist and Fifth Third to resolve concerns and potentially resume product sales if the banks are satisfied with its remediation efforts.
Possible · Within weeks

Open Questions

What specific allegations are being investigated by the U.S. Attorney's Office and SEC?
Whether any individuals will face charges in connection with the probe
How the revised affiliated asset percentage (42%) was calculated and whether it reflects accurate reporting
Whether other banks or financial institutions will follow Truist and Fifth Third in pausing product sales

Truist and Fifth Third Pause Sales of Delaware Life Products Amid Federal Probe

Quick Look

Truist Financial Corp. and Fifth Third Bancorp have paused selling products of Mark Walter's Delaware Life due to federal investigations into how the insurer's parent company reported $20 billion in affiliated assets.
The probe, involving the U.S.
Attorney's Office in Manhattan and the SEC, follows a regulatory filing showing Delaware Life revised its affiliated assets from 3% to 42% after receiving grand jury subpoenas.