By Jeffrey Newman Esq. MBA
Western Asset Management, part of Franklin Templeton, has agreed to pay a $100m civil penalty to settle a US Securities and Exchange Commission (SEC) investigation linked to former bond investor Ken Leech. Longtime bond investor Ken Leech, 72, pleaded guilty in connection with a cherry-picking investment fraud case just days before he was set to go to trial.
Leech was the chief investment officer of Western Asset Management. he pleaded guilty Friday to a single new charge of obstructing a regulatory proceeding. His federal trial in New York’s Southern District was set to start Monday.“Leech willfully and intentionally gave false and misleading testimony to the SEC in an effort to obstruct an investigation into his fraudulent scheme to favor certain clients at the expense of others,” said Sean Buckley, deputy U.S. Attorney for New York’s Southern District. “Investment managers, like Leech, are entrusted by the SEC and the public at large to comply with their duty to be honest to regulators and fair to their clients.”
Leech was originally charged in a scheme where he allegedly cherry-picked a series of trades to favor some clients while shifting losses to others. He assigned more than $600 million in gains to favored clients and $600 million in losses to others, according to federal prosecutors.
In a filing, the SEC said the fixed income group, which managed about $229bn at the end of March 2026, had “failed to take reasonable steps to detect and prevent this conduct by its former co-CIO” and was “aware” his trading and allocation practices “diverged from those of other portfolio managers”.
The regulator’s order also said Western Asset did not properly carry out its policies and procedures on reallocations and did not reasonably supervise its former co-chief investment officer.
Jeffrey Newman, JD, MBA, a former prosecutor, is a whistleblower lawyer whose firm represents physicians and other healthcare providers who become whistleblowers in healthcare fraud cases. The firm also takes cases involving tariff fraud and export control fraud. Whistleblower laws in the U.S. allow individuals with information about export control violations or tariff fraud to report it under the False Claims Act, which, if successful, awards the whistleblower a percentage of the amount collected. The Firm’s website is www.JeffNewmanLaw.com. Attorney Newman can be reached at Jeff@Jeffnewmanlaw.com or at 617-823-3217. For other blogs, see: http://JeffNewmanLaw.com
