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The complaint closely mirrors a lawsuit filed in Chicago in February 2014, which was withdrawn a day later, according to the Reuters report.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.
