Western Asset’s co-CIO Leech takes leave of absence amid SEC probe
Western Asset Management co-chief investment officer Ken Leech faces a potential enforcement action from the Securities and Exchange Commission as part of a probe into whether some clients were favored over others in allocating gains and losses from derivatives trades.
Leech, a veteran fixed-income investor who manages some of the largest bond strategies in the US, will take an immediate leave of absence after receiving a Wells notice from the SEC, the company said in a filing Wednesday. The firm also is closing its $2 billion Macro Opportunities strategy and named Michael Buchanan as sole CIO.
“The company launched an internal investigation into certain past trade allocations involving treasury derivatives in select Western Asset-managed accounts,” the firm said. “The company is also cooperating with parallel government investigations.”
The firm has said it was alerted that the SEC and Department of Justice were investigating the issue. Shares of parent company Franklin Resources Inc. fell roughly 8% to $20.82 at 2:44 p.m. in New York, and it was the worst-performing stock in the S&P 500 index.
Western Asset, with $381 billion in assets, is one of the original California bond giants and once rivaled Pacific Investment Management Co. and BlackRock Inc. in size. Its key funds have struggled in recent years amid the rise in interest rates, leading to outflows in its flagship strategy, which Leech helped run.
Franklin, which has about $1.6 trillion in assets overall, acquired Western as part of the 2020 purchase of Legg Mason.Leech has worked at Western Asset for more than 30 years, serving as CIO for the bulk of that time.
A Wells notice, which isn’t a formal allegation or finding of misconduct, provides a chance to
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