money

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.

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 ownership of his sport teams?

The 66-year-old billionaire also took a majority stake in the Los Angeles Lakers last year and owns the Chelsea soccer team in the English Premier League. There is no indication yet that any of this has affected his ownership stakes, but the probe has yet to be completed.

What is the problem with related-party transactions?

Bruce Dubinsky, a forensic accountant who worked on the Enron and Madoff cases, says the issue comes down to the motivation of the parties and can be explained through an analogy.

Sell a car to a stranger and you both research its worth and come to an agreed “fair market value,” he said. Sell it to your brother, you might cut the price to “give him a deal,” and later even forgive the payments.

“That’s why, from an audit standpoint, there should be more scrutiny if you’re doing business with the left hand and the right hand, because it’s easier to manipulate things,” Dubinsky said. “Repayments can be delayed indefinitely. They are always more suspect to fraud.”

How does that play out in the insurance industry?

Insurance is one of the most regulated industries, since the companies hold premium dollars from policyholders for future claims payouts — and regulators want to ensure the money is there when it’s needed. Related-party transactions can threaten that.

“There is a conflict of interest between the policyholders’ interest in the company being profitable and the owner’s interest in getting the least expensive financing that is available,” said Jim Donelon, who served as Louisiana insurance commissioner for 18 years before stepping down in 2024.

“It potentially threatens the solvency of the company, which then threatens the welfare of the policyholders,” Donelon said.

The National Assn. of Insurance Commissioners, for whom Donelon served as president, provides guidance to regulators on how to review related-party transactions.

What are some of the most notable examples of related-party transactions turning into financial disasters?

The failure of Enron was a prime lesson in how related-party transactions can lead to a company’s downfall.

As the Houston energy trader struggled and racked up $30 billion in debt, chief financial officer Andrew Fastow thought he found a way to keep it off Enron’s books. He created off-balance sheet entities to unload the debt and took personal stakes in them, allowing him to sit on both sides of the negotiation and pocket millions.

They were “transactions with related parties that were not at arm’s length,” Dubinsky said.

The debacle was a driving force in the passage of the Sarbanes-Oxley Act of 2002, which tightened regulations over governance, accounting and related-party transactions.

What about the Madoff fraud?

The Madoff scandal, in which investors lost $17.5 billion in invested principal, operated like a typical Ponzi scheme with returns to older investors paid by money from new investors.

However, related-party transactions were key too, and some literally involved family members. Madoff’s brother, Peter, pleaded guilty to receiving $15.7 million in sham loans and giving $9.9 million in sham loans to family members. What’s more, the auditor was a related party.

“In Madoff, what were called ‘related‑party loans’ were just sham transactions — there was no real economic substance. It was simply Madoff taking money out of his own firm,” said Dubinsky, an expert witness for the government.

Is there anything comparable with the Walter probe?

The three situations appear entirely different, but the investigation into the related-party loans made by Walter’s Delaware Life and its affiliate, Clear Spring Life and Annuity, involves vast sums of money.

After receiving the subpoenas, the firms conducted internal investigations. They had reported having $1 billion in related-party loans but, after the review, they reclassified $21 billion worth of loans as related, including $4.6 billion held by Clear Spring, said Fitch analyst Jamie Tucker, senior director of North American insurance ratings.

Executives said they were unaware the loans were going to an affiliated company.

Is there any indication what the money was used for?

“Unclear at this stage,” Tucker said. “This a developing situation with ongoing investigations.”

One clue may be a report that Walter tapped insurers to fund more deals than the Dodgers acquisition. The Wall Street Journal said five insurers had provided more than $10 billion in deal funding since Walter’s financial services company, Guggenheim Partners, got into the insurance business after the 2008 financial crisis.

What have been the implications for the insurers owned by Walters?

Fitch said the financial restatement increased the two insurers’ related-party loans from 2% to 40% of their portfolios, the highest exposure among life insurers it rates in North America.

Fitch, A.M. Best and S&P Global also downgraded Delaware Life’s outlook to negative, though they said the insurer maintain a high level of financial strength.

“Our capital position and liquidity remain strong, and our financial strength ratings are unchanged,” said Group 1001, the insurers’ parent company, in a statement.

What has Walter had to say about all this?

He has not publicly commented, but a TWG spokesperson stated that, “Mark Walter and TWG have always acted in good faith, and those who have done business with Mark know him as honest and straightforward. Nothing about these transactions was any different.”

European equities keep reaching new highs.

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The pan-European STOXX Europe 600 climbed to another record on Wednesday, closing at around 657 points after touching a fresh intraday high and extending its winning streak to a third consecutive session.

The blue-chip EURO STOXX 50, which tracks the euro area’s largest listed companies, also set a new all-time high during the day. The broader benchmark has now gained about 10% since the start of 2026.

The rally is broad-based. Germany’s DAX broke above 26,100 for the first time. France’s CAC 40 climbed to a record 8,700, while Italy’s FTSE MIB reached an unprecedented 53,540.

Record highs everywhere

Yet the companies leading Europe’s bull market bear little resemblance to the household names that have long defined the continent’s equity story.

Luxury groups are nowhere to be seen. Neither are the pharmaceutical giants that traditionally anchor European portfolios. Even banks, despite a strong year, have largely been overtaken.

Instead, the biggest winners of 2026 are the companies building the infrastructure behind the artificial intelligence boom: manufacturers of semiconductor wafers, chip-testing equipment, advanced substrates and industrial technology.

Europe’s stock market is no longer being led by brands consumers recognise. It is increasingly being powered by the suppliers enabling the world’s AI capital-spending race.

Why European stocks keep setting records

Several forces have come together to fuel the rally.

The immediate catalyst was geopolitical.

Reports that Washington and Tehran are moving towards a new agreement to reopen the Strait of Hormuz pushed oil prices sharply lower, easing inflation fears and reducing cost pressures for Europe’s manufacturers and airlines.

The economic backdrop has also surprised investors.

Eurostat’s preliminary estimate showed the eurozone economy expanded 0.4% quarter-on-quarter in the second quarter, double economists’ expectations, following flat growth in the first quarter. Annual growth accelerated to 1.0%.

Pantheon Macroeconomics’ chief eurozone economist Claus Vistesen said the euro area “comfortably beat expectations yesterday, posting GDP growth of 0.4% quarter-to-quarter in Q2, after upwardly revised zero growth in Q1. This was 0.2pp above the consensus and 0.1pp above our forecast.”

Corporate earnings have added another pillar of support.

Second-quarter reporting has generally exceeded expectations, while global enthusiasm for artificial intelligence infrastructure has transformed a small group of European technology suppliers into some of the world’s best-performing stocks.

The 10 best-performing STOXX Europe 600 stocks in 2026

These are the 10 best-performing European stocks with a market capitalisation of €1 billion or more, ranked by share price performance through 5 August.

10. ArcelorMittal (+65.3%)

Europe’s steel champion has quietly become one of this year’s biggest industrial winners.

Shares of ArcelorMittal have gained 65.3% since the start of 2026, making the company the tenth-best performer in the STOXX Europe 600 through 5 August.

The Luxembourg-based group reported revenue of $16.5 billion in the second quarter and underlying operating profit of $2.1 billion, its strongest performance in Europe for three years.

Profitability improved as new EU import quotas reduced competition from cheaper foreign steel, while the company continued buying back its own shares, returning more cash to investors.

9. Raiffeisen Bank International (+67.6%)

Higher interest rates and resilient economic activity across Central and Eastern Europe have helped the Austrian lender outperform most of its European peers. Raiffeisen Bank International shares have climbed 67.6% year-to-date through 5 August.

First-half profit excluding Russia rose 25% to €708 million, prompting management to raise its full-year forecast for net interest income to €4.4–4.5 billion.

Investors have also welcomed stronger capital levels and easing concerns over the bank’s Eastern European operations.

8. Saipem (+75.8%)

The Italian engineering group has benefited from the global revival in offshore energy investment.

Saipem stock is up 75.8% in 2026 through 5 August, extending one of the strongest rallies among European industrial companies.

First-half revenue increased to €7.35 billion, while underlying operating profit rose 9.4% to €836 million. Its order book expanded to a record €29.9 billion, giving the company years of work already secured despite trimming guidance to reflect around €70 million of conflict-related costs.

7. STMicroelectronics (+105.7%)

The Franco-Italian chipmaker has emerged as one of Europe’s biggest beneficiaries of renewed enthusiasm for artificial intelligence infrastructure.

Shares of STMicroelectronics have more than doubled in 2026, rising 105.7%.

Second-quarter revenue climbed 26% to $3.49 billion, while the company returned to an operating profit after several difficult quarters. Management forecast around $3.7 billion in revenue for the current quarter, signalling that the semiconductor downturn is gradually easing.

6. AIXTRON (+121.0%)

The German company manufactures highly specialised equipment used to produce advanced semiconductors.

AIXTRON shares have surged 121% since the beginning of the year, placing the company among Europe’s biggest AI winners.

Second-quarter orders jumped 81% to €214.5 million, driven by booming demand for photonics and power-chip manufacturing equipment. Management reaffirmed its full-year revenue forecast of €560 million.

5. Technoprobe (+135.1%)

Few investors know Technoprobe, yet almost every advanced semiconductor relies on its testing technology before reaching customers.

Technoprobe has rallied 135.1% in 2026 through 5 August, making it one of Europe’s strongest-performing technology stocks.

Following a record first quarter with €187 million in revenue, management raised its full-year sales forecast to between €950 million and €1.05 billion, reflecting growing demand for AI-related chip testing equipment.

4. ams-OSRAM (+136.2%)

The Austrian sensor and photonics specialist has staged one of the European market’s biggest turnarounds.

ams-OSRAM stock has gained 136.2% since January.

Second-quarter revenue reached €805 million, at the top end of company guidance, while management continued making progress towards commercial production of its microLED technology for augmented-reality glasses.

Investors also welcomed the sale of its non-core sensor division to Infineon, strengthening the company’s balance sheet.

3. Tullow Oil (+136.4%)

The oil producer is the only energy company among Europe’s top-performing stocks this year.

Shares of Tullow Oil have advanced 136.4% year-to-date through 5 August.

Management recently increased its forecast for 2026 free cash flow to between $170 million and $250 million, more than doubling its previous guidance after benefiting from stronger oil prices during the first half of the year.

Ironically, the stock fell on Wednesday as hopes of easing tensions in the Middle East pushed crude prices lower.

2. AT&S (+343.5%)

Austria’s AT&S manufactures the advanced substrates that connect artificial intelligence processors with memory chips inside high-performance servers.

AT&S shares have soared 343.5% in 2026, making the company Europe’s second-best-performing stock.

When reporting quarterly results on 4 August, management forecast 30%–35% revenue growth this year, driven by continued investment in AI data centres.

Despite the spectacular rally, the shares remain about 40% below the record highs reached in June.

1. Soitec (+414.5%)

No European company has benefited more from the artificial intelligence investment boom than France’s Soitec.

Soitec shares have skyrocketed 414.5% since the start of 2026 through 5 August, making the company the best-performing constituent of the STOXX Europe 600.

The semiconductor materials specialist reported annual revenue of €592 million, down 34% as the industry worked through excess inventories. However, investors focused on signs that the recovery had begun.

Revenue from its fast-growing photonics business exceeded $100 million for the first time, while free cash flow reached €63 million, far ahead of analysts’ expectations.

Management expects revenue to return to growth during the current financial year, reinforcing confidence that Soitec is becoming one of Europe’s biggest beneficiaries of the global AI infrastructure build-out.

Many have commented on the recent reforms to the Venezuelan Hydrocarbons regime and its reach. Most people have focused on the irony of Delcy Rodríguez giving away the country’s resources after years of empty anti-US rhetoric and, of course, it is ridiculously tempting to do so. But the long-term questions beyond the political posturing of the US robbing Venezuelan oil linger: is the reform good for Venezuela? Was the previous regime really favorable to the country’s interest? Why has the reaction by major oil companies been rather slow or lukewarm, as the WSJ reported a month ago?

The debate over the adequacy of Venezuelan oil regulations predates January 3. A statist vision has prevailed among political elites for almost half a century. Contrary to the chavista narrative, the oil industry in Venezuela was nationalized by Carlos Andrés Pérez fifty years ago. Up until the 1990s, the State, through PDVSA, performed exclusively primary oil activities: exploration and production. Then, due to the sharp drop in oil prices, the cash-strapped Rafael Caldera government, using a provision of the 1975 nationalization law, had to allow for private investment in primary activities through service agreements with foreign oil companies. These contracts were branded as the Apertura Petrolera, which became a bête noire for the Venezuelan Left, who even tried to stop the process via the Supreme Court.

Chávez put an end to this with his 2001 Hydrocarbons Law reform, migrating from the service agreements to joint venture companies where the Venezuelan state was the main shareholder. The refusal of some companies, like Conoco and Exxon, to migrate to the joint ventures led to several of the arbitration claims against Venezuela. Another contentious aspect of the Venezuelan oil business was that only State-owned companies could directly export oil. Joint venture companies could only sell oil to another PDVSA subsidiary, which led to PDVSA running up huge debts with foreign partners.

The Chávez 2001 model ruled until recently. Only PDVSA directly, or the JVs where PDVSA was a majority shareholder, could perform exploration and production activities and export oil.

The Executive also retained very discretionary power over what is called the government take (the percentage of oil or profits taken as a consideration in agreements with foreign partners in the joint ventures and applicable taxes), which can be used by the government to drive down the profits of its private company partners, a major deterrent for private investment in oil.

Up until very recently, the Chávez 2001 model was ruling: only PDVSA directly, or the joint ventures where PDVSA was a majority shareholder, could perform exploration and production activities and sell oil in international markets.

A similar regime was implemented in Colombia. In 2003, that country reformed its hydrocarbon regime to its current iteration, where it removed the exclusive primary activities rights granted to Ecopetrol, and established that this State-owned company would compete with private companies for exploration through contracts granted by a newly minted hydrocarbons regulator, the ANH. The ANH grants exploration rights under competitive bids where Ecopetrol competes with private companies under the same conditions. The purpose was to simplify the existing bureaucracy and award contracts under competitive, transparent bids, instead of having an all-mighty State company that both drills and decides who drills under very discretionary powers, as is the current case with PDVSA.

This model was behind past reform proposals by the opposition and have been part of the expert discussion on oil reform in Venezuela, and it is also included in María Corina Machado’s oil sector proposal, which received hypocritical criticism from people who remained mum about Delcy’s sweeping reforms. This model is seen as a true break from the previous one, as it takes power away from omnipotent PDVSA and turns it into just another player who has to compete with private companies in competitive bidding before a national, impartial regulator.

The reforms do represent a momentous formal break with the statist oil policy that has prevailed in the country for over 50 years. Under the new Hydrocarbons Law, private companies can perform primary activities through contracts with PDVSA subsidiaries and joint venture companies, and can export oil directly to international markets, paying the government take. The law, enacted on January 29, 2026,  also establishes that these contracts can include arbitration clauses, which can provide more certainty and guarantees for potential investors than submitting them to Venezuela’s infamously corrupt and dependent courts. The law also worryingly removes parliamentary oversight over the oil sector.

But the catch is that abiding by the law has never been chavismo’s strong suit, and they had been violating the Hydrocarbons Law since 2018. Under the aegis of the disgraced oil czar/soccer player Tarek el Aissami, PDVSA started signing contracts granting primary activities rights to private companies, as well as the right to directly export oil. This was done on dubious legal grounds under presidential emergency powers. Thus, the 2026 Hydrocarbons Law is only a regularization of a de facto situation that already existed.

The new regulations give a lot of discretionary power to the government to control the performance of the new contracts and to set the government’s take unilaterally.

As with everything in life, the devil is in the details, and the new law is very scant on the details of the new contracts, it seems to have been drafted in a rush. It defines very broadly the terms and conditions of the contracts (the new contracts pertaining to joint venture companies are only mentioned in passing) while at the same time giving the government wide discretionary powers to interpret them, and the last thing any international investor wants is to give chavismo discretionary powers over anything.

Delcy Rodríguez also enacted new regulations of the Hydrocarbons Law (which have not been updated since 1943) and two additional resolutions establishing some parameters for the government take. A centralized regulation of the government take is a welcome change, but the reaction to it has been mixed, as it gives a lot of discretionary power to the government to control the performance of the new contracts and to set the government’s take unilaterally.

The law also fails to incorporate any change to the current structure of the Venezuelan oil architecture. Unlike the reform in Colombia, the new law does not remove the elephantine, vastly discretionary bureaucracy that chavismo created.  PDVSA remains the almighty administrator of Venezuelan oil with no independent technical supervision of its role.

So, are the reforms good? They do signify a break from the statist vision of the oil industry, one that does not correspond with the wretched state of the Venezuelan oil sector. However, it is obviously a patched-up, limited instrument enacted by Delcy’s multiuse minions more to appease Donald Trump (even the reaction from American oil companies has been lukewarm) than anything resembling a definitive vision for the Venezuelan oil industry in an era of decarbonization.

The most likely outcome, already playing out according to the WSJ piece, is that the major oil companies (already traumatized by the previous experiences with chavismo expropriation frenzy over 20 years ago) remain skeptical or limit its investment due to the lack of clear guarantees and conditions and smaller, less known and less risk-averse companies are the ones who end up signing these contracts for a short-term gain. Chevron, who is now the most powerful player in the Venezuelan oil business, publicly signaled that the law doesn’t go far enough for them, and, considering their leverage with the Trump administration, it is possible that the Rodríguez regime is forced to further liberalize and refine the text of the law. But under the current conditions of legal uncertainty and arbitrariness no company, whether big or small, will risk investing the vast amount of money needed  (about 183 billion dollars) to recover the Venezuelan oil industry after decades of destruction and pillage. Oil companies may be evil, but never stupid. 

All of these scenarios have a limited effect on the recovery of the Venezuelan oil industry without a democratic transition because for any law to have a meaningful impact on the economy you need actual rule of law and independent courts, and you also need actual experts drafting the new laws. Not the very few lackeys of the most incompetent government in our history who happen to be proficient in English.