SEC Charges Ken Leech, Former Co-Chief Investment Officer of Western Asset Management Co., with Fraud

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.