SEC Seeks Final Judgment Against Former Western Asset Co-CIO Ken Leech in Cherry Picking Case

The Securities and Exchange Commission today moved for entry of a final judgment by consent against Stephen Kenneth Leech II, the former co-chief investment officer of registered investment adviser Western Asset Management Company LLC, whom the SEC previously charged with a multi-year cherry-picking allocation scheme.

As alleged in the SEC’s November 2024 complaint, from at least January 2021 through October 2023, Leech placed trades and then routinely delayed allocations until near or after futures markets set daily settlement prices, allowing him to observe price movements and disproportionally allocate hundreds of millions of dollars in realized and unrealized first‑day gains to favored portfolios and a similar amount of realized and unrealized first‑day losses to disfavored portfolios.

Without admitting the allegations in the SEC’s complaint, Leech consented to entry of a final judgment, subject to court approval, that would order him to pay a $3 million penalty, impose an officer-and-director bar and permanently enjoin him from violating antifraud provisions of federal securities laws. Leech also agreed to a forthcoming associational bar against him. 

In June 2026, the Commission instituted settled public administrative proceedings against Western Asset, ordering the firm to pay a $100 million civil penalty and establishing a Fair Fund to distribute money to affected investors in the disfavored portfolios. 

“The conduct by Leech and Western Asset was an egregious breach of fiduciary obligations to their clients,” said Brent Wilner, Associate Director of the SEC’s Los Angeles Regional Office. “Together, the resolution with Leech, if approved by the court, and the SEC’s prior settlement with Western Asset will return $103 million and provide meaningful relief to harmed investors, and reinforce that advisers must put clients first, every time.”