Franklin unit Wamco to pay $100 million civil penalty
Wamco will pay $100 million to settle SEC charges over an alleged cherry-picking scheme. The deal resolves federal probes into Kenneth Leech ahead of his trial.
FRANKLIN RESOURCES INC unit Western Asset Management will pay a $100 million civil penalty to resolve SEC charges regarding a $600 million trade-allocation scheme. The settlement addresses allegations that former investment chief Kenneth Leech favored specific client accounts between January 2021 and October 2023. Managed assets at the unit fell 40% to $228.9 billion by March 31 from $381.1 billion in June 2024.
The regulator said the fine is one of the largest under the current administration. Kenneth Leech allegedly steered profitable Treasury derivative trades to his Macro Opportunities strategy while shifting losses to Core and Core Plus portfolios. Leech, who was charged in November 2024, has pleaded not guilty to four counts of fraud and one count of making false statements.
