SEC Requests Final Judgment Against WAMCO Exec in Cherry-Picking Case

The Securities and Exchange Commission moved Tuesday for a final judgment by consent in the civil case against Ken Leech, former CIO of fixed-income manager Western Asset Management Co. LLC. If approved, the final judgment would require Leech to pay a $3 million penalty in connection with an alleged cherry-picking scheme.

Leech was accused in 2024 of assigning roughly $600 million in profitable trades to favored clients and about $600 million in losing trades to unfavored clients from 2021 through 2023.

Leech pleaded guilty to obstruction in June in a separate criminal case in U.S. District Court for the Southern District of New York, and remaining charges against him were dropped as part of the plea deal.

The final judgment would also ban Leech from being a public company executive or director and prohibit him by court order from committing securities fraud. Leech also agreed to be prohibited from associating with specific entities in the securities industry.

In June, the SEC ordered Western Asset to pay a $100 million civil penalty to resolve an investigation into the firm’s internal controls and its failure to monitor Leech. The firm was also ordered to establish a fund for distributing the money to affected investors.

“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, in a statement. “Advisers must put clients first, every time.”

Leech’s sentencing for the obstruction charge will take place in the coming weeks, according to the SEC.