SEC Moves for Final Judgment Against Ex-Western Asset Co-CIO Leech
The SEC is seeking a consent judgment against Kenneth Leech, former co-CIO of Western Asset Management, in an alleged cherry-picking scheme.
The Securities and Exchange Commission has filed a motion seeking entry of a final judgment by consent against Stephen Kenneth Leech II, the former co-chief investment officer of Western Asset Management Company LLC, a registered investment adviser, in connection with an alleged cherry-picking scheme.
Cherry picking, in securities enforcement parlance, refers to the practice of selectively allocating profitable trades to favored accounts while directing losing positions to others — a violation of an investment adviser's fiduciary duty to treat clients equitably. The SEC's action targets conduct at one of the bond-management industry's more prominent firms.
Read more Black Hills Corp Stock Jumps 5% After Google Data Center Deal →
Western Asset Management, a subsidiary of Franklin Templeton, has been a major player in fixed-income investing, making the charges against its former senior executive significant for the asset management sector. Leech served as co-CIO, a role that would have given him broad authority over trade allocation decisions across client portfolios.
A consent judgment, if entered by a federal court, would resolve the civil enforcement action without Leech admitting or denying the SEC's findings, a standard structure in settled regulatory cases. The terms and any financial penalties associated with the final judgment were not fully detailed in the SEC's initial announcement.
The case underscores the SEC's continued focus on trade allocation practices within the investment advisory industry, an area regulators have historically viewed as a prime vector for conflicts of interest and client harm. Continue reading at Press Releases.
