On November 25, 2024, the U.S. Securities and Exchange Commission (SEC) announced fraud charges against Ken Leech, the former co-Chief Investment Officer of Western Asset Management Co. (WAM). The SEC alleges that Mr. Leech engaged in a multi-year 'cherry-picking' scheme from January 2021 to October 2023.
The charges state that Mr. Leech disproportionately allocated better-performing trades to favored portfolios while shifting worse-performing trades to other, disfavored portfolios. Concurrently, the U.S. Attorney's office in Manhattan unsealed an indictment against Mr. Leech, alleging he assigned over $600 million in gains to favored clients and over $600 million in losses to disfavored clients.
Mr. Leech faces criminal charges including securities fraud, investment advisor fraud, commodity trading advisor fraud, commodities fraud, and false statements. These charges represent a severe blow to the reputation of Western Asset Management and Franklin Resources, Inc., and are expected to have significant legal and financial ramifications for the firm.
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