Former star US bond manager Leech fined by SEC, following guilty plea in 'cherry-picking' case

Franklin Templeton

06/10/2026 23:34

NEW YORK, Oct 6 (Reuters) - Kenneth Leech, the former star bond manager who pleaded guilty to obstructing a US Securities and Exchange Commission probe into alleged "cherry-picking," will pay a $3 million fine to settle the regulator's related civil case, the SEC said on Tuesday.
Leech's fine is in addition to the $100 million civil penalty that his former employer Western Asset Management Co, or Wamco, agreed to pay in June to resolve SEC civil charges it failed to properly supervise him
 "Cherry-picking" is the assigning of profitable trades to favored investors and losing trades to other investors. Authorities said Leech's alleged scheme involved more than $600 million and ran from January 2021 to October 2023
Tuesday's settlement requires court approval, and would result in $103 million being returned to harmed investors, the SEC said
Leech and Wamco did not admit wrongdoing. Lawyers for Leech did not immediately respond to requests for comment
Authorities accused Leech of waiting to see how trades performed on their first day before retroactively allocating them to clients, to boost Wamco revenue and his own compensation
Leech allegedly steered better trades to "Macro Opportunities" portfolios that he said reflected his best ideas, and worse trades to "Core" and "Core Plus" portfolios
Prosecutors accused Leech of lying during sworn SEC testimony by answering yes when asked if he had "an allocation in mind" when placing trades
Leech pleaded guilty in June to one obstruction charge, and could face six to 12 months in prison under recommended federal sentencing guidelines. Prosecutors dropped four fraud charges
Wamco is part of Franklin Resources BEN.N, whose brands include Franklin Templeton
     

(Reporting by Jonathan Stempel in New York; Editing by Jonathan Spicer )
((jon.stempel@thomsonreuters.com ; +1 646 223 6317; Reuters Messaging: jon.stempel.thomsonreuters.com@reuters.net /))