Franklin Resources' Wamco will pay $100 million to settle SEC charges related to a $600 million cherry-picking scheme. The firm did not admit wrongdoing, and former CIO Kenneth Leech faces a criminal trial.
The settlement highlights regulatory scrutiny on asset managers' trade allocation practices and internal controls, potentially impacting investor trust and operational standards across the industry.
Western Asset Management (Wamco), a subsidiary of Franklin Resources, has agreed to pay $100 million to resolve charges brought by the Securities and Exchange Commission (SEC). The allegations stem from a scheme involving $600 million in trades, orchestrated by former Chief Investment Officer Kenneth Leech. The SEC cited deficiencies in Wamco's oversight and its practices for allocating trades fairly among its clients. While Wamco has settled with the regulator, it has not admitted any wrongdoing. Kenneth Leech is currently facing a separate criminal trial related to these activities.
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