SEC Seeks Final Judgment Against Ex-Western Asset Co-CIO in Cherry-Picking Case
The SEC has moved for a consent final judgment against Ken Leech, former co-CIO of Western Asset Management, over alleged cherry-picking misconduct.
The Securities and Exchange Commission has asked a federal court to enter a final judgment by consent against Stephen Kenneth Leech II, the former co-chief investment officer of Western Asset Management Company LLC, a registered investment adviser, in connection with a cherry-picking enforcement action.
Cherry-picking schemes typically involve a portfolio manager allocating profitable trades to favored accounts while assigning losing trades to others — a practice regulators view as a serious breach of fiduciary duty that harms investors whose accounts are disadvantaged in the process.
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Western Asset Management is one of the largest fixed-income investment managers in the United States, and the case against its former co-CIO drew significant industry attention when the SEC's charges were first announced. Leech held one of the most senior investment roles at the firm before the allegations surfaced.
A consent judgment, if approved by the court, would resolve the civil charges without Leech formally admitting or denying the SEC's allegations, a standard procedural mechanism in agency enforcement settlements. The precise terms of any financial penalties or industry bars associated with the proposed judgment were not detailed in the agency's filing announcement.
The action reflects the SEC's continued focus on trade allocation misconduct as a priority enforcement area, particularly where senior investment professionals are alleged to have exploited their position to benefit select clients or accounts at the expense of others. Continue reading at Press Releases.
