The U.S. Securities and Exchange Commission moved for entry of a consent final judgment against Stephen Kenneth Leech II, former co-chief investment officer of Western Asset Management Company, over an alleged multiyear cherry-picking allocation scheme. Subject to court approval, the judgment would require Leech to pay a USD 3 million penalty, permanently enjoin him from violating federal securities law antifraud provisions and impose an officer-and-director bar. He also agreed to a forthcoming associational bar without admitting the SEC’s allegations. The SEC alleged that, from at least January 2021 through October 2023, Leech delayed trade allocations until near or after futures markets set daily settlement prices. This allegedly enabled him to direct hundreds of millions of dollars in first-day gains to favored portfolios and similar amounts in first-day losses to disfavored portfolios. The action follows a June 2026 settlement requiring Western Asset to pay a USD 100 million civil penalty and establishing a Fair Fund for affected investors. Leech separately pleaded guilty in June 2026 to obstruction of justice related to testimony provided during the SEC investigation, with sentencing expected in the coming weeks.
U.S. Securities and Exchange Commission seeks final judgment imposing $3 million penalty and bars on former Western Asset executive
The U.S. Securities and Exchange Commission is seeking court approval of a consent judgment requiring former Western Asset co-chief investment officer Stephen Kenneth Leech II to pay a USD 3 million penalty and accept officer-and-director, associational and antifraud restrictions. The SEC alleged that he delayed trade allocations to direct first-day gains to favored portfolios and losses to disfavored portfolios.