Delaware Life Products Paused by Banks Amid Federal Investigations

Two banks have suspended the sale of products offered by Mark Walter's insurer, Delaware Life, due to concerns surrounding federal investigations into how the insurance company's parent entity disclosed approximately $20 billion in assets linked to other entities controlled by the billionaire owner of the Los Angeles Dodgers.

The temporary halt by Truist Financial Corp. and Fifth Third Bancorp came to light on Friday. This development followed a statement released two days prior by Walter's holding company, TWG Global, asserting that no fraudulent activity had occurred at Delaware Life or its affiliate, Clear Spring Life and Annuity.

While Bloomberg initially reported on the pause, a source close to the situation confirmed the banks' decision to CNBC, speaking anonymously as the information has not been officially released.

The same source indicated that Delaware Life continues to engage with both financial institutions to support existing agreements and discuss trends within the insurance industry. Furthermore, Delaware Life is reportedly keeping the banks informed about its efforts to reduce the proportion of affiliated-party assets.

Truist has a long-standing business relationship with Delaware Life, while Fifth Third only commenced its dealings with the insurer in April, according to the confidential source.

A spokesperson for Delaware Life stated, "Our communications with key distribution partners remain open and cooperative."

Fifth Third declined to provide a comment, and Truist has not yet responded to requests for a statement.

Delaware Life and Clear Spring are currently under investigation by the U.S. Attorney's Office in Manhattan and the Securities and Exchange Commission, as disclosed by Delaware Life in a regulatory filing.

News outlets have reported that FBI agents, as part of an investigation into Walter's businesses, seized his phone and computer in September pursuant to a warrant executed on a private plane in Chicago.

In February, both Delaware Life and Clear Spring received grand jury subpoenas in connection with these probes, according to Delaware Life's regulatory filing.

Following the receipt of these subpoenas, Delaware Life conducted a review of its disclosures concerning affiliated and related-party assets. This review led to a revision of the percentage of its total invested assets classified as affiliated with other Walter-owned companies, increasing it from 3% to 42%.

These investigations gained significant public attention after Walter agreed to sell his majority stake in the Los Angeles Lakers earlier this month, less than a year after acquiring the team.

Two banks have temporarily stopped selling products from Mark Walter's insurer, Delaware Life, amidst concerns stemming from federal inquiries into how the insurer's parent company reported roughly $20 billion in assets connected to other entities under the control of the billionaire Los Angeles Dodgers owner.

The pause by Truist Financial Corp. and Fifth Third Bancorp surfaced on Friday, two days after Walter's holding company, TWG Global, issued a statement denying any fraud at Delaware Life and its affiliate, Clear Spring Life and Annuity.

Bloomberg initially broke the news of the pause. A source familiar with the matter, speaking on the condition of anonymity as it hasn't been officially announced, confirmed the banks' decision to CNBC.

The individual noted that Delaware Life is continuing discussions with both banks to support existing contracts and to address trends in the insurance sector. The source also mentioned that Delaware Life is keeping the banks updated on its efforts to reduce the volume of affiliated-party assets.

Truist has a long-standing business relationship with Delaware Life. Fifth Third only began working with the insurer in April, according to the source.

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

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, as stated by Delaware Life in a regulatory filing.

News outlets have reported that FBI agents confiscated Walter's phone and computer in September under a warrant executed on a private plane in Chicago as part of an investigation into his businesses.

Both Delaware Life and Clear Spring received grand jury subpoenas in February in relation to the probes, Delaware Life stated in its regulatory filing.

Following a review of its affiliated- and related-party disclosures after receiving the subpoenas, Delaware Life adjusted the proportion 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 divest his majority stake in the Los Angeles Lakers earlier this month, less than a year after purchasing the team.