United States SEC Charges Franklin Templeton Fixed Income Manager Western Asset Management ex-CIO Stephen Kenneth (“Ken”) Leech for Multi-Year Fraud to Allocate Favourable Trades to Certain Portfolio from 2021 to 2023
26th November 2024 | Hong Kong
The United States Securities & Exchange Commission (SEC) has charged Franklin Templeton fixed income manager Western Asset Management ex-CIO Stephen Kenneth (“Ken”) Leech for multi-year fraud to allocate favourable trades to certain portfolio from 2021 to 2023. United States SEC (25/11/24): “The Securities and Exchange Commission today announced fraud charges against Stephen Kenneth (“Ken”) Leech, the former co-chief investment officer (CIO) of registered investment adviser Western Asset Management Company LLC or WAMCO, for engaging in a multi-year scheme to allocate favorable trades to certain portfolios, while allocating unfavorable trades to other portfolios, a practice known as cherry-picking. The SEC’s complaint alleges that from at least January 2021 through October 2023, Leech placed trades with brokers and then routinely waited until later in the trading day to allocate the trades among clients in the portfolios he managed. According to the complaint, Leech’s delay between placing and allocating trades gave him the opportunity to observe price movements, and then disproportionally allocate trades at a first-day gain to favored portfolios and trades at a first-day loss to disfavored portfolios. As alleged, Leech allocated hundreds of millions of dollars of net first-day gains to favored portfolios, which also benefited Leech personally, and a similar amount of net first-day losses to disfavored portfolios. The SEC’s complaint, filed in the United States District Court for the Southern District of New York, charges Leech with violating antifraud and other provisions of the federal securities laws, and seeks permanent and conduct-based injunctions, an officer-and-director bar, disgorgement, prejudgment interest, civil penalties, and other relief.” Earlier in 2024 November, Franklin Templeton ($1.6 trillion AUM) has reported $31.3 billion outflow & $389 million impairment charges (2024 Q3 earnings) to fixed income manager Western Asset Management with the Commodity Futures Trading Commission (CFTC) conducting an investigation into the derivatives trades. In 2024 August, Franklin Templeton fixed income manager Western Asset Management ($381 Billion AUM) had announced to close the $2 billion Macro Opportunities Strategy Fund, and placed Chief Investment Officer Ken Leech on leave of absence after civil charges were filed by the United States SEC (Securities & Exchange Commission). The investigations are on trade allocations involving treasury derivatives, and alleged placing winning trades to preferred clients accounts. Western Asset Management has appointed Michael Buchanan as Chief Investment Officer with immediate effect.
“ United States SEC Charges Franklin Templeton Fixed Income Manager Western Asset Management ex-CIO Stephen Kenneth (“Ken”) Leech for Multi-Year Fraud to Allocate Favourable Trades to Certain Portfolio from 2021 to 2023 “
$1.6 Trillion Franklin Templeton Reports $31.3 Billion Outflow & $389 Million Impairment Charges to Fixed Income Manager Western Asset Management with Commodity Futures Trading Commission Conducting Investigation into Derivatives Trades, Had Placed Chief Investment Officer Ken Leech on Leave of Absence in 2024 August After Civil Charges Filed by United States SEC, Investigations on Trade Allocations Involving Treasury Derivatives & Alleged Placing Winning Trades To Preferred Clients Accounts
9th November 2024 – Franklin Templeton ($1.6 trillion AUM) has reported $31.3 billion outflow & $389 million impairment charges (2024 Q3 earnings) to fixed income manager Western Asset Management with the Commodity Futures Trading Commission (CFTC) conducting an investigation into the derivatives trades. In 2024 August, Franklin Templeton fixed income manager Western Asset Management ($381 Billion AUM) had announced to close the $2 billion Macro Opportunities Strategy Fund, and placed Chief Investment Officer Ken Leech on leave of absence after civil charges were filed by the United States SEC (Securities & Exchange Commission). The investigations are on trade allocations involving treasury derivatives, and alleged placing winning trades to preferred clients accounts. Western Asset Management has appointed Michael Buchanan as Chief Investment Officer with immediate effect. Western Asset Management Company (21/8/24): “Western Asset Management Company (“Western Asset” or the “Company”), a global manager of active fixed-income solutions, announced today that it has appointed Michael Buchanan to Chief Investment Officer. Mr. Buchanan had served as co-Chief Investment Officer with Ken Leech, who is on a leave of absence, effective immediately. In line with the Company’s succession plan, Mr. Buchanan has been elevated to Chief Investment Officer. Along with his responsibilities as Chief Investment Officer, Mr. Buchanan has assumed leadership of all global investment management responsibilities. With nearly two decades at the Company and over three decades of industry expertise, Mr. Buchanan has helped lead the Company’s Global and US Strategy Committees and has had direct oversight of the Company’s global investment teams, including global macro and all sector teams. Prior to Western Asset, Mr. Buchanan served as Managing Director and Head of US Credit Products at Credit Suisse Asset Management and as Executive Vice President and Portfolio Manager at Janus Capital Management. As disclosed in the 10-Q filed by Franklin Resources in July, the Company launched an internal investigation into certain past trade allocations involving treasury derivatives in select Western Asset-managed accounts. The Company is also cooperating with parallel government investigations. Mr. Leech recently received a Wells Notice from the Staff of the U.S. Securities and Exchange Commission, and is on a leave of absence to focus on this matter.”
$1.6 Trillion Franklin Templeton Fixed Income Manager Western Asset Management to Close $2 Billion Macro Opportunities Strategy Fund, Placed Chief Investment Officer Ken Leech on Leave of Absence After Civil Charges Filed by United States SEC, Investigations on Trade Allocations Involving Treasury Derivatives & Alleged Placing Winning Trades To Preferred Clients Accounts, Western Asset Management Appoints Michael Buchanan as Chief Investment Officer With Immediate Effect
22nd August 2024 – Franklin Templeton ($1.6 trillion AUM) fixed income manager Western Asset Management ($381 Billion AUM) has announced to close the $2 billion Macro Opportunities Strategy Fund, and placed Chief Investment Officer Ken Leech on leave of absence after civil charges were filed by the United States SEC (Securities & Exchange Commission). The investigations are on trade allocations involving treasury derivatives, and alleged placing winning trades to preferred clients accounts. Western Asset Management has appointed Michael Buchanan as Chief Investment Officer with immediate effect. Western Asset Management Company (21/8/24): “Western Asset Management Company (“Western Asset” or the “Company”), a global manager of active fixed-income solutions, announced today that it has appointed Michael Buchanan to Chief Investment Officer. Mr. Buchanan had served as co-Chief Investment Officer with Ken Leech, who is on a leave of absence, effective immediately. In line with the Company’s succession plan, Mr. Buchanan has been elevated to Chief Investment Officer. Along with his responsibilities as Chief Investment Officer, Mr. Buchanan has assumed leadership of all global investment management responsibilities. With nearly two decades at the Company and over three decades of industry expertise, Mr. Buchanan has helped lead the Company’s Global and US Strategy Committees and has had direct oversight of the Company’s global investment teams, including global macro and all sector teams. Prior to Western Asset, Mr. Buchanan served as Managing Director and Head of US Credit Products at Credit Suisse Asset Management and as Executive Vice President and Portfolio Manager at Janus Capital Management. As disclosed in the 10-Q filed by Franklin Resources in July, the Company launched an internal investigation into certain past trade allocations involving treasury derivatives in select Western Asset-managed accounts. The Company is also cooperating with parallel government investigations. Mr. Leech recently received a Wells Notice from the Staff of the U.S. Securities and Exchange Commission, and is on a leave of absence to focus on this matter.”
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