The Securities and Exchange Commission is investigating the purchases of three California mansions as well as loans to a now-bankrupt retailer involving Guggenheim Partners, the sprawling US financial services firm.

Guggenheim Partners Investment Management, the asset management division that looks over more than $300bn, is regulated by the SEC and is the subject of the inquiry by the agency’s enforcement arm.

In a statement, Guggenheim Partners said: “We are cooperating fully with the SEC’s investigation of our subsidiary, Guggenheim Partners Investment Management (GPIM), and we cannot comment further.”

The Wall Street Journal first reported the SEC inquiry on Sunday.

The investigation is looking into the role played in the transactions by ABS Capital, a Miami-based firm with close ties to Guggenheim founder Mark Walter. As the Financial Times first reported in 2017, Mr Walter and Scott Minerd, Guggenheim’s chief investment officer and leader of GPIM, had been at odds over the management and direction of the firm. The SEC investigation could become another source of tension between the two; while the investigation focuses on Mr Minerd’s GPIM unit, the transactions targeted involve ABS Capital, the firm with ties to Mr Walter.

Mr Walter and ABS had together purchased a Malibu mansion from Hollywood mogul David Geffen in 2017 for $85m. Separately, ABS had bought two homes in nearby Pacific Palisades, in one of which Guggenheim’s global head of institutional distribution, Alexandra Court, lived for a period.

Ms Court’s dramatic restructuring of the sales team had rankled Mr Minerd and was a source of broader tension at the firm. Multiple sources told the FT that Mr Walter and Ms Court had a close personal relationship. Guggenheim has said that no non-business relationship existed between them, but if it had it would have been properly disclosed to the Guggenheim board.

A person close to Guggenheim Partners said Ms Court no longer resides in the Palisades home. This person also said that GPIM had no involvement in the purchase of any of the three homes nor any relationship with ABS Capital.

The SEC investigation is also interested in Guggenheim Partners’ involvement in BCBG Max Azria, the women’s retailer. When BCBG filed for bankruptcy protection in early 2017, GPIM lost hundreds of millions of dollars in debt and equity investments it had made in the years before the Chapter 11 filing.

However, an entity called Allerton Funding that was controlled by ABS had provided a $54m rescue financing in 2016. Its senior position to the GPIM investments allowed it the chance to recover its investments in the reorganised BCBG. A Guggenheim executive denied that Allerton or ABS benefited from favouritism and said that GPIM clients declined to participate in BCBG rescue fundraisings.

ABS Capital is run by Juan Ball and Pablo Stalman, two former Guggenheim executives who had founded Guggenheim Partners Latin America. A company controlled by Mr Ball’s brother, Diego, received a $100m loan from GPIM in 2015, a transaction that the FT reported last year had raised alarm bells among compliance staff about possible conflicts of interest and a lack of documentation about how the proceeds of the loan would be used.

Guggenheim maintains all protocols were followed in making the loan.

The SEC’s latest enforcement investigation came after the agency received a whistleblower complaint in 2016 that highlighted an alleged culture of self-dealing at Guggenheim. That complaint used as an example the firm’s investments in Atlas Mara, the investment vehicle founded by former Barclays chief executive Bob Diamond. Guggenheim has declined to comment on that earlier investigation but has said it fully co-operates with SEC compliance examinations.

Mr Diamond is not being investigated and is not accused of any wrongdoing.

There is no certainty that the SEC’s inquiries will lead to any penalties or sanctions.



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