Investing.com -- Franklin Resources’ Western Asset Management agreed to pay a $100 million civil penalty to settle charges brought by the Securities and Exchange Commission related to a cherry-picking scheme conducted by its former co-chief investment officer.
The SEC charged that Western Asset failed to prevent Stephen Kenneth Leech II from engaging in a scheme that favored certain portfolios over others between January 2021 and October 2023.
According to the charges, Leech allocated trades with first-day gains to favored portfolios while directing trades with first-day losses to disfavored portfolios within the Core and Core Plus strategies.
The SEC stated that Western Asset was aware Leech delayed trade allocations until after market settlement prices were established.
Western Asset Management will distribute the $100 million penalty to investors who were harmed in the Core and Core Plus portfolios.
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