Kenneth Leech, previously a leading bond manager at Western Asset Management, entered a guilty plea on Friday in connection with obstructing an investigation into alleged “cherry-picking”.
He pleaded guilty to one count of obstructing a US Securities and Exchange Commission proceeding, avoiding a trial that had been due to begin on Monday in federal court in Manhattan.
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Leech, the former co-chief investment officer of Wamco, had been facing four fraud counts over accusations that he ran a cherry-picking scheme worth more than $600m between January 2021 and October 2023. Those counts are set to be dropped.
According to prosecutors, Leech gave false evidence under oath during SEC testimony in March 2024, including when he replied yes after being asked whether he had “an allocation in mind” when making trades.
Leech was quoted by the Financial Times as saying to Judge on Friday: “I knew that I was giving false and misleading testimony about my trade allocation process, and that giving that testimony was wrong”.
Under federal sentencing guidelines, Leech may face between six and 12 months in prison, a substantially lighter outcome than a fraud conviction would have carried, reported Reuters.
Last week, Western agreed to pay a $100m civil penalty to the SEC to settle the regulator’s investigation into Leech.
In a filing, the SEC said the fixed income group, which managed about $229bn at the end of March 2026, had “failed to take reasonable steps to detect and prevent this conduct by its former co-CIO” and was “aware” his trading and allocation practices “diverged from those of other portfolio managers”.
