Mark Walter's Delaware Life Insurance Co is set to cut as much as $6.5 billion in investments in his businesses after facing regulatory heat over the billionaire's financial dealings, a holding company of Los Angeles Dodgers owner said on Tuesday.

TWG Global, Walter's holding company, said it had agreed ‌to swap up to $6.5 ⁠billion ⁠of Delaware Life's related-party investments for an equivalent amount of assets classified as independent.

U.S. federal prosecutors and the SEC are investigating Walter's business empire to determine whether Walter or his businesses committed fraud by concealing financial connections while borrowing billions of dollars from insurers he controls, the Wall Street Journal reported on Sunday.

"The Group 1001 insurance ​companies are working with the Delaware Department of Insurance ⁠to address ‌the identified investments, and TWG is committed to resolving ​this matter ​to the Department's satisfaction," a spokesperson for Walter's holding company TWG ⁠Global said.

In February, Walter's Delaware Life and Clear Spring Life and Annuity Co received grand jury subpoenas in connection with an investigation being conducted by the U.S. Attorney's Office for the Southern District of New York. Wall Street's top regulator has also been conducting a parallel investigation.

The regulators are focusing on whether certain private credit investments categorized as unaffiliated investments by Delaware Life and Clear Spring Life were ‌actually affiliated in nature.

After receiving the subpoenas, Delaware Life conducted an internal investigation and found errors relating to the presentation of certain ​related-party investments.

Ratings agency ​S&P Global revised ⁠its outlook on Delaware Life to negative last month after the firm restated its annual financial statements and reclassified a large volume of private credit investments as ​affiliated or related-party assets.

Group 1001 insurance companies' capital positions and liquidity remain strong, TWG Global said in a statement on Tuesday.

Walter, 66, earlier this month agreed to sell the Los Angeles Lakers to venture capitalist Joshua Kushner and former Disney CEO Bob Iger in a record $12.5 billion deal.