Mark Walter's sports empire made him one of the most recognizable owners in American sports. The financial empire behind it was considerably less visible, even though it was hiding in plain sight. Recent developments now have the business mogul facing scrutiny over the financial machinery underpinning his teams—and raising much bigger questions about the entire private credit sector.

Walter, the controlling owner of the Dodgers and, until recently, the majority owner of the Lakers, is at the center of a Securities and Exchange Commission investigation, according to regulatory filings first reported on by Bloomberg in July.

The probe is examining whether companies tied to his financial empire improperly handled billions of dollars in loans from insurance companies he separately controls. No criminal charges have been filed against Walter, and the investigation does not allege that the Dodgers or Lakers committed wrongdoing. Walter's group bought the Dodgers in 2012 from Frank McCourt for roughly $2 billion—then a record price for a sports franchise—in a sale that followed the team's bankruptcy filing. More than $1.2 billion of the financing for that purchase, however, came from insurance companies controlled by Walter through Guggenheim Partners, the asset-management firm where he serves as chief executive, according to a breakdown of the transaction by the Los Angeles Times.

Walter did not respond to a request for comment from Fortune. Guggenheim Partners declined to comment.

Federal prosecutors and the SEC are examining whether Walter's insurance companies improperly lent money to businesses connected to him without adequately disclosing the relationships. Delaware Life Insurance Co. and Clear Spring Life and Annuity Co. conducted internal reviews after receiving federal grand-jury subpoenas and significantly restated what they described as errors in prior financial reporting. Transactions between “related parties”—life insurance money essentially being routed elsewhere within Guggenheim—were not $1.4 billion, or 3% of investments, but actually over $17 billion, or at least 39% of total invested assets.

Related-party transactions are not inherently illegal, but they can create conflicts of interest and are subject to disclosure and regulatory scrutiny, particularly when insurance companies are involved because they hold money intended to pay policyholders' future claims. That oversight comes largely through state-level insurance regulators rather than any single federal watchdog, and the National Association of Insurance Commissioners has separately been reviewing how life insurers account for and disclose private-credit holdings. A week after the Lakers sold in a headspinning bombshell, Walter is reported in English newspapers to be considering exiting another trophy asset, Chelsea Football Club, the Premier League team he bought into through the Todd Boehly-led takeover of 2022.

The scrutiny has already produced a concrete financial response. Delaware Life, which Walter controls, agreed to reduce its exposure to businesses connected to him by swapping as much as $6.5 billion of related-party investments for assets classified as independent. That does not settle the question of whether Walter will eventually need to sell his sports assets to satisfy lenders, regulators, or investors. The Wall Street Journal reported that Walter has been trying to unwind portions of his empire amid the investigation, potentially including the Dodgers and Cadillac's Formula One operation.

Walter also reportedly sought to extract cash from another valuable LA asset. Before selling the Lakers, he held discussions with Charter Communications about ending the Lakers' and Dodgers' local television agreements early in exchange for lump-sum payments, according to Sports Business Journal. Those discussions did not produce a deal. The Dodgers' television agreement runs through 2038, while the Lakers' agreement runs through 2031.

Is private credit running on life insurance?

The private credit market—loan and debt financing extended by non-bank lenders—has grown to more than $1 trillion in the U.S. in 2023, according to the Federal Reserve Bank of Boston. Walter's case raises new questions about just what else is going on under the surface. The IMF has cautioned in its financial-stability reports that limited disclosure across private credit makes it harder to see where leverage and potential losses are building. The risk flagged by regulators and the IMF is not private credit itself, but structures where the same firm sits on multiple sides of a deal—the private-credit firm takes in premium money via an insurer that it controls, then directs that money into loans it originates or that flow back to its own funds and portfolio companies.

The reporting on the federal investigation points out that Walter's insurers held private-credit investments connected to other Walter-controlled businesses. In other words, the same billionaire could sit on multiple sides of the same transaction—controlling an insurance company on one side, while also controlling the businesses receiving financing on the other. A retiree's annuity payment can sit on an insurer's balance sheet—but that money didn't travel in one straight line from a policy to Dodger Stadium; it traveled through layers of insurers, asset managers, funds, loans, and affiliated companies.

Guggenheim is not the only private-credit firm building an empire around the convergence of insurance and private markets. Apollo has made the model central to its business through Athene, its retirement-services and insurance business. “Athene and Apollo have seen tremendous mutual benefit from our longstanding strategic relationship,” Jim Belardi—CEO of Athene—said in a January 2022 press release when they merged, “and now with full alignment our value will be significantly stronger than the sum of our parts.”

Yankee Global Enterprises announced a $2.6 billion financing arrangement with affiliates of Apollo Sports Capital, a permanent-capital platform of Apollo. The transaction combines credit and equity and will be used to support the growth of the New York Yankees and refinance existing debt.

KKR has built a similar insurance connection. The company acquired a majority stake in Global Atlantic in 2021 and bought the remaining stake in 2024. KKR explicitly describes the relationship as mutually reinforcing—the firm can use its investment capabilities and origination network for Global Atlantic, while the insurance business gives KKR access to long-duration capital.

KKR separately agreed in February to acquire Arctos Partners for about $1.4 billion. Arctos is a specialist sports investment firm whose portfolio includes minority interests in professional sports franchises such as the NFL's Buffalo Bills. KKR's own investor presentation described the acquisition as a way to establish a sports platform while expanding its ability to raise capital and use its insurance network.

Life insurers have become particularly important players because their liabilities can stretch decades into the future. They need investments that bankroll over long periods, making loans and other private assets attractive. A 2025 Federal Reserve Bank of Chicago working paper estimated private credit accounted for about $849 billion—or 14%—of life insurers' balance sheets in 2024. Life insurers across the country have been increasing their exposure to private credit as they search for higher yields. S&P Global reported this year that U.S. life insurers are increasing private-credit allocations for higher returns and portfolio diversification.

If all of this sounds like a bank—borrowing short and lending long—well, yes and no. Life insurers' obligations are typically tied to future claims or contracts that can be expensive or impossible to surrender early, so they are not “runnable” in the same way a bank is. The Federal Reserve says insurers are therefore “typically less exposed to traditional liquidity risk than banking organizations,” although certain annuities and institutional funding products can still be runnable at times.

On both the equity and insurance side, the pattern is stable—capital that was raised for insurance ends up cross-financing the sponsor's other sports or business interests, often with limited transparency. Insurers as a captive funding source for a broader financial empire is now a mainstream private-credit playbook, and the SEC probe is effectively its first stress-test of whether existing rules can catch it before it's brought into public view—and, depending on what investigators find, whether it forces fuller disclosure of related-party lending by insurer-affiliated asset managers.

This story was originally featured on Fortune.com.