Kenneth Leech, the former co-chief investment officer at Western Asset Management Co., pleaded guilty on June 12 to obstructing an SEC investigation into his trading practices. The plea came just three days before he was set to stand trial on multiple fraud charges.
Leech admitted to providing false and misleading testimony during the SEC’s probe into what regulators have described as a “cherry-picking” scheme. He allegedly routed winning trades to his favored clients and dumped the losers on everyone else.
The scheme and the numbers behind it
The investigation centered on Leech’s trading allocation practices at Western Asset Management from January 2021 through October 2023. During that period, prosecutors alleged that Leech steered profitable trades toward preferred client portfolios while saddling other accounts with losses.
The favored strategies allegedly racked up more than $600 million in net first-day gains from the cherry-picked allocations.
