Guggenheim's CEO Is In Talks to Take Control of Unit in Shake-Up

  • CEO Walter may form company for personal assets, people say
  • Guggenheim is also close to a deal to sell its ETF business

Mark Walter, the billionaire chief executive of Guggenheim Partners, is in discussions to take control of one of the firm’s insurance units as the $290 billion company fractures, according to people with knowledge of the plans.

Walter, 57, is taking steps to remove insurer Guggenheim Life and Annuity Co. and fold it into his Delaware Life Insurance Co., which was rebranded this month as Group One Thousand One, said the people, who asked not to be named because the information is private. The CEO also is working to form a holding company to oversee his personal assets including the insurance firms, the Los Angeles Dodgers baseball franchise and other businesses he controls, according to two of the people.

The negotiations may end with Walter stepping away from day-to-day management of Guggenheim, which he co-founded in 2000, the people said. The timing of Walter’s possible departure, terms of the separation and remaining management structure are all under discussion at the firm’s headquarters in Chicago and New York, said the people.

Board Support

Walter has no present intention to leave as CEO, according to another person familiar with his plans.

In an internal memo to Guggenheim employees on Wednesday, the firm’s board of directors said Walter has the “full and unequivocal support” of the entire board and that the firm is “thriving, growing, stable and strong.” The memo, which was viewed by Bloomberg News, said press reports regarding Guggenheim and its senior management are “wrong.”

Guggenheim may also close a deal to sell its exchange-traded funds business to money manager Invesco Ltd. within a month, according to people familiar with the matter, which would mark another shift in the makeup of the company.

A spokesman for Guggenheim at Sitrick & Co. declined to comment. Heather Kreager, a Guggenheim board member representing Sammons Enterprises Inc., which controls 35 percent of Guggenheim, has not discussed Walter’s departure with the board, according to a Sammons spokeswoman.

Though its name dates to a 19th-century fortune, Guggenheim wasn’t formed until 2000 when the family office of descendants of mining baron Meyer Guggenheim merged with Walter’s firm, Liberty Hampshire. Closely held Guggenheim has investment banking, asset management and insurance divisions.

Walter, a former banker with First Chicago, founded Liberty Hampshire in 1996 as a securitization specialist, recruiting Scott Minerd two years later to run asset management. Alan Schwartz, who joined Guggenheim in 2009 after serving as the last CEO of Bear Stearns Cos., heads the investment-banking division that runs merger and acquisition deals, debt origination and other advisory services.

The firm has experienced turbulence this year amid news reports of tensions between Walter and Chief Investment Officer Minerd over last year’s promotion of Alexandra Court to oversee global distribution for the investment management unit, which manages $237 billion as of June 30. Sitrick has denied a conflict between Walter and Minerd.

Read more about the tumult among Guggenheim executives here

The Wall Street Journal reported Tuesday that the U.S. Securities and Exchange Commission earlier this year began looking at Guggenheim’s “operations, certain investments and disclosures.” The agency requested information on several deals, including one involving an investment entity founded by Bob Diamond, the former CEO of Barclays Plc, according to the report. Two people with knowledge of Guggenheim told Bloomberg there had been a routine, periodic SEC examination of Guggenheim this year, but that the firm hadn’t been informed of any investigation. They also said Guggenheim has done business with Diamond. Sitrick and Judy Burns, an SEC spokeswoman, declined to comment.

— With assistance by Sonali Basak, and Scott Soshnick

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