Kenneth Leech, the former co-chief investment officer at Western Asset Management Co., pleaded guilty on June 12 in Manhattan federal court to obstructing a Securities and Exchange Commission investigation. The charge stems from false testimony he gave about a trade allocation scheme that allegedly funneled over $600 million in profits to his preferred client portfolios.
The guilty plea landed just three days before a criminal fraud trial was scheduled to begin on June 15. Rather than roll the dice in front of a jury, Leech chose to admit he lied to the SEC during testimony on March 6, 2024.
The cherry-picking scheme
Here’s how it allegedly worked. Leech managed multiple client portfolios at Western Asset Management, a firm overseeing roughly $229 billion in assets as of March 2026. Between January 2021 and October 2023, he is accused of watching how trades performed throughout the day, then deciding after the fact which clients would get the winners and which would eat the losses.
The favored clients sat in Leech’s “Macro Opportunities” portfolios. The less fortunate ones occupied what the firm called “Core” and “Core Plus” portfolios. Over that nearly three-year window, the scheme allegedly steered more than $600 million in gains toward the preferred accounts, while directing comparable losses to the disfavored ones.
