Key Takeaways
- • Stephen Kenneth Leech II, former co-chief investment officer at Western Asset Management Company (Wamco), has agreed to pay $3 million to settle SEC allegations that he steered hundreds of millions of dollars to favored portfolios, according to the Securities and Exchange Commission announcement on Oct. 6.
- • The SEC alleges that from January 2021 to October 2023, Leech directed more than $600 million toward portfolios he favored and away from others, a practice known as cherry-picking, while managing billions of dollars in client assets.
- • The SEC's complaint was filed Nov. 25, 2024, in US District Court for the Southern District of New York, and the settlement is subject to court approval.
- • Leech did not admit the allegations in the consent resolution, according to supplemental coverage of the matter.
- • The case concerns allocation practices at a major fixed-income manager, underscoring regulatory scrutiny of trade allocation and fairness across client portfolios.
Summary
Stephen Kenneth Leech II, a former co-chief investment officer at Western Asset Management Company (Wamco), has agreed to pay $3 million to settle allegations that he steered hundreds of millions of dollars to certain portfolios, the Securities and Exchange Commission said on Oct. 6, according to Compliance Week.
The SEC alleges that from January 2021 to October 2023, Leech, who managed billions of dollars in client assets, directed more than $600 million toward portfolios he favored and away from those that were not in his favorites basket. The agency describes this practice as cherry-picking. The SEC filed its complaint on Nov. 25, 2024, in US District Court for the Southern District of New York.
Additional coverage of the matter reports that Leech agreed to a $3 million penalty to resolve SEC charges that he ran a multiyear cherry-picking scheme. Leech did not admit the allegations but consented to a final judgment, subject to court approval, according to reporting in the database. The settlement remains subject to court approval.
The matter is significant for institutional investors because it centers on the allocation of investment opportunities across client accounts managed by a large fixed-income asset manager. Wamco is a subsidiary of Franklin Resources.
The SEC alleges that from January 2021 to October 2023, Leech, who managed billions of dollars in client assets, directed more than $600 million toward portfolios he favored and away from those that were not in his favorites basket. The agency describes this practice as cherry-picking. The SEC filed its complaint on Nov. 25, 2024, in US District Court for the Southern District of New York.
Additional coverage of the matter reports that Leech agreed to a $3 million penalty to resolve SEC charges that he ran a multiyear cherry-picking scheme. Leech did not admit the allegations but consented to a final judgment, subject to court approval, according to reporting in the database. The settlement remains subject to court approval.
The matter is significant for institutional investors because it centers on the allocation of investment opportunities across client accounts managed by a large fixed-income asset manager. Wamco is a subsidiary of Franklin Resources.
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