SEC Pursues Final Judgment Against Former Western Asset Co-CIO Ken Leech

The U.S. Securities and Exchange Commission (SEC) announced on October 6, 2026, that it is seeking a final judgment by consent against Stephen Kenneth "Ken" Leech II, the former co-chief investment officer of Western Asset Management Company LLC. This development follows allegations of a multi-year fraudulent "cherry-picking" scheme that has been under investigation since 2024.

Evidence and context

According to SEC filings, the alleged scheme involved Leech delaying the allocation of trades until after observing their first-day performance. The SEC claims that favorable trades were assigned to preferred portfolios while less favorable trades were directed to other portfolios, disadvantaging certain clients. This practice allegedly allowed Leech to profit while exposing disfavored strategies to greater losses.

The case has seen multiple legal and administrative actions. On November 25, 2024, the SEC initially charged Leech with fraud, coinciding with a criminal indictment by the U.S. Department of Justice. Western Asset Management subsequently faced regulatory scrutiny for failing to detect or prevent the alleged misconduct. On June 5, 2026, the SEC issued a settled administrative order against the firm, highlighting compliance lapses during Leech's tenure. Additionally, a civil lawsuit brought by investors is ongoing, with Bloomberg Law reporting on October 6, 2026, that both Western Asset and Leech are defending against claims of saddling certain investment strategies with losses.

The SEC's pursuit of a final judgment against Leech marks a significant step in the regulatory and legal proceedings surrounding the case. While the judgment, if entered, would resolve the SEC's claims, Leech and Western Asset Management continue to face litigation from affected investors.