SEC fines Western Asset Management Company 100 million dollars, former Chief Investment Officer "cherry-picking" case concluded

Glonghui, June 5 — The U.S. Securities and Exchange Commission (SEC) has issued an administrative order, imposing a $100 million civil penalty on Western Asset Management Company and issuing a cease and desist order due to the company's failure to effectively supervise trading allocation fraud committed by former co-Chief Investment Officer Stephen Leech. According to the SEC, between January 2021 and October 2023, Leech engaged in "cherry-picking" violations, preferentially allocating daily profitable trades amounting to hundreds of millions of dollars to specific portfolios, while directing loss-making trades to other portfolios. Western Asset Management Company knew or should have known about these irregularities but did not take reasonable measures to investigate and prevent them, nor did it implement the internal control policies related to fair allocation. The $100 million fine will be used to establish a Fair Fund for compensating harmed investors. Western Asset Management Company has conducted its own investigation, proactively cooperated with regulators, and agreed to settle the related allegations.