Subscribe our newsletter and get notifications to stay update
This is read by an automated voice.Please report any issues or inconsistencies here.
See more from the L.A.Times in Google Search.
Set us as preferred The federal law enforcement probe into the financial affairs of the Dodgers’ controlling owner, Mark Walter, seems to focus on what looks like an obscure financial maneuver: related-party transactions.They are deals between entities with business or personal ties, including loans, sales and other transactions, that can have legitimate reasons but pose potential conflicts of interest and typically require extra scrutiny.Walter tapped insurers he controlled to provide most of the financing for the $2.15-billion acquisition of the Dodgers in 2012, The Times has reported — a deal later vetted by state insurance regulators.Now, regulators reportedly are investigating whether billions of dollars’ worth of similar loans made by Walter’s companies were properly disclosed.There are examples in which related-party transactions led to trouble, including the 2001 bankruptcy of Enron Corp., the largest at the time in Wall Street history.Bernie Madoff profited from his Ponzi scheme through related-party loans.At issue with Walter is $21 billion in loans not disclosed to state insurance regulators that were made by two Delaware insurers he owns, according to ratings agency Fitch.
The loans reportedly were made to companies with ties to Walter or his TWG Global holdings company.Business The companies backed by the owner of the Dodgers may have failed to disclose loans properly.The seriousness of the investigation has been highlighted by subpoenas served on the insurers and the reported seizure of Walter’s cellphone and laptop by federal authorities.
Still, investigations by prosecutors and securities regulators can result in no action.Here are more details on the risk presented by related-party transactions and why they require disclosure and extra regulatory scrutiny.What do the investigations mean for his o...