Ex-bond manager Leech fined $3 million by SEC in cherry-picking case
Kenneth Leech will pay a $3 million fine to settle a U.S. Securities and Exchange Commission civil case related to his guilty plea in a probe into alleged "cherry-picking." His former employer, Western Asset Management Co, had previously agreed to pay a $100 million civil penalty.
NEW YORK, Oct 6 (Reuters) — Kenneth Leech, the former star bond manager who pleaded guilty to obstructing a US Securities and Exchange Commission probe into alleged "cherry-picking," will pay a $3 million fine to settle the regulator's related civil case, the SEC said on Tuesday. Leech's fine is in addition to the $100 million civil penalty that his former employer Western Asset Management Co, or Wamco, agreed to pay in June to resolve SEC civil charges it failed to properly supervise him "Cherry-picking" is the assigning of profitable trades to favored investors and losing trades to other investors.
Authorities said Leech's alleged scheme involved more than $600 million and ran from January 2021 to October 2023 Tuesday's settlement requires court approval, and would result in $103 million being returned to harmed investors, the SEC said Leech and Wamco did not admit wrongdoing.
Lawyers for Leech did not immediately respond to requests for comment Authorities accused Leech of waiting to see how trades performed on their first day before retroactively allocating them to clients, to boost Wamco revenue and his own compensation Leech allegedly steered better trades to "Macro Opportunities" portfolios that he said reflected his best ideas, and worse trades to "Core" and "Core Plus" portfolios Prosecutors accused Leech of lying during sworn SEC testimony by answering yes when asked if he had "an allocation in mind" when placing trades Leech pleaded guilty in June to one obstruction charge, and could face six to 12 months in prison under recommended federal sentencing guidelines.
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