SEC Moves for Final Judgment Against Ex-Western Asset Co-CIO in Cherry-Picking Case
The SEC is seeking a consent judgment against Ken Leech, former co-CIO of Western Asset Management, over alleged cherry-picking of trades.
The Securities and Exchange Commission has filed a motion seeking entry of 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 an ongoing enforcement action centered on alleged cherry-picking of investment trades.
Cherry-picking, in securities law, refers to the practice of selectively allocating profitable trades to favored accounts while directing less favorable trades to others — a form of fraud that regulators treat as a serious breach of fiduciary duty owed to clients. The SEC's move against Leech signals the agency's intent to bring the case to a formal close through a negotiated resolution rather than a contested trial.
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Western Asset Management is one of the largest fixed-income investment managers in the United States, overseeing assets on behalf of institutional and retail clients. Leech, who served in a senior leadership role as co-CIO, held significant influence over the firm's investment allocation decisions, making the allegations particularly consequential for clients whose portfolios may have been affected.
A consent judgment, if entered by the court, would represent a binding resolution in which the defendant neither admits nor denies the SEC's findings but agrees to terms set by the commission and approved by a federal judge. Such judgments typically include financial penalties, disgorgement of ill-gotten gains, and injunctive relief barring future violations.
The SEC's pursuit of a final judgment underscores its continued focus on trade allocation abuses across the asset management industry. Continue reading at Press Releases.
