Guggenheim accused of using cash from annuity unit to fund CEO's purchase of LA Dodgers

Guggenheim accused of using cash from annuity unit to fund CEO's purchase of LA Dodgers
Case charges firm with 'siphoning' funds from insurance companies it owns.
JUL 02, 2018

Guggenheim Partners is facing a class-action lawsuit claiming it defrauded annuity investors by saddling an insurance affiliate with high-risk assets and diverting cash from its insurance operations in part to pay for CEO Mark Walter's 2012 purchase of the Los Angeles Dodgers baseball team. In a complaint filed in Kansas City, Kansas, on May 22 and amended last month, Albert Ogles accused Guggenheim of deceiving customers at its insurance companies, including Security Benefit Life, from which he had bought a $145,000 annuity in July 2012. The complaint seeks triple and other damages from Guggenheim, Security Benefit Life and other defendants, according to a report by Reuters. (More: Guggenheim said to consider sale of asset management unit) The complaint charges that Guggenheim and others siphoned cash from the insurance companies they controlled for purposes including the purchase of the Los Angeles Dodgers baseball team. The complaint closely mirrors a lawsuit filed in Chicago in February 2014, which was withdrawn a day later, according to the Reuters report. Mr. Ogles said that Guggenheim's actions left the insurers in "hazardous" financial shape, and locked investors into poorly performing investments while Guggenheim promoted its self-interests. The firm has until Aug. 8 to respond in court to the complaint. "The allegations are without merit and [we] are going to proceed with a motion to dismiss the case," Guggenheim's lawyer Dan Webb, a partner at Winston & Strawn, told Reuters in an email last week. In April, Guggenheim Partners confirmed it is cooperating with an investigation of its asset management subsidiary that is being conducted by U.S Securities and Exchange Commission.

Latest News

Maryland bars advisor over charging excessive fees to clients
Maryland bars advisor over charging excessive fees to clients

Blue Anchor Capital Management and Pickett also purchased “highly aggressive and volatile” securities, according to the order.

Wave of SEC appointments signals regulatory shift with implications for financial advisors
Wave of SEC appointments signals regulatory shift with implications for financial advisors

Reshuffle provides strong indication of where the regulator's priorities now lie.

US insurers want to take a larger slice of the retirement market through the RIA channel
US insurers want to take a larger slice of the retirement market through the RIA channel

Goldman Sachs Asset Management report reveals sharpened focus on annuities.

Why DA Davidson's wealth vice chairman still follows his dad's investment advice
Why DA Davidson's wealth vice chairman still follows his dad's investment advice

Ahead of Father's Day, InvestmentNews speaks with Andrew Crowell.

401(k) participants seek advice, but few turn to financial advisors
401(k) participants seek advice, but few turn to financial advisors

Cerulli research finds nearly two-thirds of active retirement plan participants are unadvised, opening a potential engagement opportunity.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today’s choppy market waters, says Myles Lambert, Brighthouse Financial.

SPONSORED Beyond the dashboard: Making wealth tech human

How intelliflo aims to solve advisors' top tech headaches—without sacrificing the personal touch clients crave