Nosedive at Western Asset: Ex-Star Trader Ken Leech Pleads Not Guilty

In a spectacular fraud trial, former Co-Chief Investment Officer of Western Asset Management, Ken Leech, is in the spotlight of justice. The seasoned bond trader, suspected of selectively allocating profits to certain clients and burdening others with losses over a three-year period, pleaded not guilty in a New York federal court on Monday. The 70-year-old Leech faces serious charges parallel to a lawsuit filed by the US Securities and Exchange Commission. Reportedly, his practices have channeled more than $600 million in profits to favored clients. This chapter has caused unrest at Western Asset Management, also known as Wamco, for over a year. Many significant institutional investors, including pension funds, have withdrawn approximately $65 billion, and further outflows seem imminent. Leech remains free on a $10 million bail and the surrender of his passport but is not allowed to leave the continental USA. According to investigators, the indictment points to a strategy implemented after a career low resulting from unfortunate interest rate bets and volatile market movements. Notably, Wamco's once highly praised Macro Opportunities Fund is reportedly suffering under the circumstances, with its assets under management having dropped by 80%. Leech's defense, represented by attorney Jonathan Sack, highlights the trader's nearly five-decade immaculate career and emphasizes that Leech gained no financial benefit from the misconduct. Amid these allegations, Western Asset, a subsidiary of Franklin Resources, appears cooperative with authorities, without itself being the focus of misconduct.