NEW YORK: The Department of Justice (DOJ) and Securities and Exchange Commission (SEC) have charged former co-CIO of Western Asset Management Ken Leech in an alleged $600m fraud case in the US.
The two agencies allege that from January 2021 through October 2023, Leech ‘cherry-picked’ trades, allocating favourable trades to certain portfolios, while allocating unfavourable trades to other portfolios.
Leech did this by ‘routinely’ waiting for a certain period after placing trades with brokers before allocating the trades among clients and portfolios, allowing him to observe price movements and then ‘disproportionally allocate trades at a first-day gain to favoured portfolios and trades at a first-day loss to disfavoured portfolios,’ according to the SEC. Leech allocated $600m of net first-day gains to favoured portfolios and a similar amount of net first-day losses to disfavoured ones, it is alleged.
