Former star US bond manager Leech fined by SEC after guilty plea in 'cherry-picking' case
BEN•Kenneth Leech will pay a $3 million fine to settle the SEC’s civil case after pleading guilty to obstructing its probe into alleged trade “cherry-picking.” With a $100 million penalty previously agreed to by his former employer, the settlement would return $103 million to harmed investors, pending court approval.
1. SEC settlement
Kenneth Leech, a former bond manager at Western Asset Management Co., will pay a $3 million fine to settle the SEC’s related civil case, the regulator said. The settlement requires court approval and, combined with the $100 million civil penalty Western Asset agreed to pay in June, would result in $103 million being returned to harmed investors.
2. Alleged trade allocations
Authorities said the alleged scheme involved more than $600 million and ran from January 2021 to October 2023. They accused Leech of waiting to see how trades performed on their first day before allocating them to clients, steering better trades to “Macro Opportunities” portfolios and worse trades to “Core” and “Core Plus” portfolios. Leech and Western Asset did not admit wrongdoing.
3. Guilty plea
Leech pleaded guilty in June to one obstruction charge; prosecutors dropped four fraud charges. He could face six to 12 months in prison under recommended federal sentencing guidelines. Western Asset is part of Franklin Resources.
