Western Asset Management agreed to pay $100 million to settle SEC charges stemming from a cherry-picking scheme run by its former co-chief investment officer, Ken Leech, according to a Bloomberg Tax report published on June 5, 2026.

The civil settlement resolves the regulatory side of a case that has been building since late 2024. In November of that year, the DOJ's SDNY office charged Leech with a fraudulent allocation scheme in which he allegedly routed winning trades to favored client accounts after execution, shifting losing trades elsewhere — conduct the government characterized as generating more than $600 million in ill-gotten gains across the affected accounts. The SEC filed parallel fraud charges the same day.

Cherry-picking, in the enforcement context, refers specifically to the practice of delaying trade allocation until after price direction is known, then assigning profitable fills to preferred accounts and unprofitable ones to others. It is among the cleaner forms of securities fraud to prosecute because broker execution records create a precise, timestamped trail: allocation decisions that consistently favor the same accounts post-execution, over a statistically meaningful sample, are difficult to explain away as coincidence.

Leech held one of the more prominent fixed-income mandates in the industry. Western Asset, a Pasadena-based subsidiary of Franklin Templeton, managed hundreds of billions in bond assets — predominantly for institutional clients, including pension funds and insurance companies. The co-CIO structure meant Leech had direct authority over portfolio-level trading decisions across a wide range of strategies, which regulators say gave him the latitude to execute block trades and then selectively allocate fills.

The $100 million settlement with the firm is a corporate resolution only and does not resolve Leech's personal criminal or civil exposure. The DOJ charges — which carry potential custodial sentences — remain pending as of the most recent reporting. It is worth being precise about what the settlement does and does not do: Western Asset is resolving its own regulatory liability for failing to detect or prevent the conduct; Leech faces a separate reckoning.

The gap between the November 2024 charges and the June 2026 settlement is roughly 19 months — not unusual for a matter of this complexity, where regulators must negotiate remediation terms, disgorgement calculations, and compliance undertakings with a firm still operating under parent-company ownership. Franklin Templeton completed its acquisition of Legg Mason — Western Asset's former parent — in 2020, meaning Franklin has been managing the reputational and legal fallout of conduct it did not supervise and arguably could not have anticipated.

For institutional allocators who are or were Western Asset clients, the settlement raises standard post-enforcement questions: whether they were among the disfavored accounts, whether restitution flows to them through the settlement, and what remediation the firm has implemented in its trade allocation and compliance infrastructure. SEC settlements of this type typically include undertakings around supervisory controls, but the specifics are embedded in the settlement order rather than the press release.

The broader enforcement picture here is one the SEC and DOJ have pursued with increasing coordination over the past several years — simultaneous civil and criminal referrals for allocation fraud, rather than sequential. That coordination compresses the timeline for firms facing parallel proceedings and raises the stakes for individuals who might otherwise view a civil settlement as a containment strategy. Leech did not, based on available reporting, settle the civil charges alongside the firm.

Western Asset's $100 million payment ranks as a substantial corporate penalty for a compliance failure of this kind, though the precise allocation between disgorgement, prejudgment interest, and civil penalties will matter for how it is characterized under accounting and tax treatment. The firm has not publicly commented on whether it will seek indemnification or contribution from Leech personally — a question that tends to surface in cases where individual culpability is both alleged and contested.