Guggenheim Partners, the multi-billion-dollar firm that owns the Hollywood Reporter and the Los Angeles Dodgers, is facing a Securities and Exchange Commission investigation into its relationship with former junk-bond trader Michael Milken, Fortune magazine reported.
In a March 18 cover story, Fortune found that the federal agency is examining whether Milken, who agreed to a lifetime ban from the securities industry, is trading bonds with the $170 billion-strong Guggenheim.
A spokeswoman for the SEC declined to comment to TheWrap saying: "We can neither confirm nor deny the existence of any investigation."
But Milken, a longtime client of Guggenheim's who at times invested as much as $800 million with the firm, may be acting as a manager of the financial giant's investments beyond his own money, Fortune said.
Guggenheim owns Guggenheim Digital Media, the parent company of THR, Billboard and Adweek.
The 1998 settlement Milken -- dubbed the one-time "king of junk bonds" -- reached with the SEC for his role in a series of 1980s Wall Street scandals allows him to manage his own money, but he is banned from acting as an investment adviser or broker.
Now the SEC is looking into transactions Milken made with Guggenheim, including a joint investment into the energy company Milagro, in which the pair helped invest millions.
Todd Boehly, the president of Guggenheim, was subpoenaed by the SEC, and the firm was forced to hand over tens of thousands of documents to investigators.
A spokeswoman for Guggenheim did not respond to requests from TheWrap for comment, though CEO Mark Walter told Fortune: "Mike doesn't have an ownership or managerial role of any kind at Guggenheim. The firm's interaction with him is no different than it is with a number of clients."
A spokesperson for Milken denied any wrongdoing.
"He discusses investments with these advisors from time to time, but only as an investor of his funds and those of his family," the statement said. "During this entire time, he has had no desire to be in the securities business in any capacity and has strictly avoided doing anything that could be interpreted otherwise."