Cherry-Picking Exec Pleads Guilty to Obstruction

Ken Leech, the former co-CIO of fixed-income shop Western Asset Management Co. LLC, entered into a plea deal on Friday that could see the bond manager avoid prison time associated with charges stemming from an alleged cherry-picking scheme, the Southern District of New York announced Friday. 

In 2024, Leech was charged for allegedly assigning hundreds of millions of dollars’ worth of profitable trades to favored clients, while directing losses to unfavored clients. 

Leech, who pleaded guilty to an obstruction charge, could now face up to one year in prison, avoiding the more than 20 years he faced under the charges that would have been argued at his trial, which was scheduled to start on June 15. The plea deal comes ahead of the June 15 trial in the U.S. District Court for the Southern District of New York. The remainder of Leech’s charges were dropped as part of the plea. 

“Leech willfully and intentionally gave false and misleading testimony to the SEC in an effort to obstruct an investigation into his fraudulent scheme to favor certain clients at the expense of others,” said Deputy U.S. Attorney Sean Buckley in a statement. “Investment managers, like Leech, are entrusted by the SEC and the public at large to comply with their duty to be honest to regulators and fair to their clients. Today’s plea reflects the commitment of this Office and its law enforcement partners to protecting everyday investors—in New York City and abroad—from investment advisers who violate their legal commitments and seek to deceive clients for their gain or the gain of others.” 

Earlier this month, Western Asset Management paid a $100 million civil penalty to the SEC to resolve an investigation into the firm regarding its internal controls and failure to monitor Leech’s actions.  

Leech is scheduled to be sentenced on September 21.