SEC Seeks Final Judgment Against Ex-Western Asset Co-CIO Ken Leech
The SEC moved for a consent final judgment against former Western Asset co-CIO Ken Leech in a cherry-picking enforcement case.
The Securities and Exchange Commission has moved for entry of a final judgment by consent against Stephen Kenneth Leech II, the former co-chief investment officer of registered investment adviser Western Asset Management Company LLC, according to an SEC press release.
The enforcement action centers on allegations of so-called cherry-picking, a practice in which a portfolio manager allegedly allocates winning trades to favored accounts while directing losing trades elsewhere — a scheme regulators view as a serious breach of fiduciary duty to investors.
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Leech held one of the most senior investment roles at Western Asset, a prominent fixed-income asset manager, making the case notable in scope. A consent judgment, if entered by the court, would resolve the civil charges without a contested trial, typically requiring the defendant to accept penalties while neither admitting nor denying the underlying allegations.
The SEC's pursuit of a final judgment signals the agency's intent to close out the civil case and impose whatever financial penalties and industry bars may have been negotiated as part of the consent process. Enforcement actions targeting senior executives at major asset managers remain a priority for the commission as it works to protect retail and institutional investors from allocation abuses.
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