By Joseph De Avila
Longtime bond investor Ken Leech pleaded guilty in connection with a cherry-picking investment-fraud case just days before he was set to go to trial.
Leech, the former chief investment officer of Western Asset Management, pleaded guilty Friday to a single charge of obstructing a regulatory proceeding. His federal trial in New York's Southern District was set to start Monday.
The former star bond trader had been facing five charges, including investment adviser fraud and securities fraud, which each carry a maximum sentence of 20 years in prison. The single charge to which he pleaded guilty, having to do with obstructing a U.S. Securities and Exchange Commission investigation in March 2024, carries a maximum sentence of five years.
Lawyers for Leech, 72 years old, declined to comment.
"Leech willfully and intentionally gave false and misleading testimony to the SEC in an effort to obstruct an investigation into his fraudulent scheme to favor certain clients at the expense of others," said Sean Buckley, deputy U.S. Attorney for New York's Southern District. "Investment managers, like Leech, are entrusted by the SEC and the public at large to comply with their duty to be honest to regulators and fair to their clients."
Leech was charged in 2024 in a scheme where he allegedly cherry-picked a series of trades to favor some clients while shifting losses to others. He assigned more than $600 million in gains to favored clients and $600 million in losses to others, according to federal prosecutors.
The alleged scheme took place between January 2021 and October 2023, prosecutors said. It involved Leech placing trades and then waiting until later in the day before allocating them in client accounts, after Leech saw how the trades were performing, according to prosecutors.
Leech retired from Western Asset Management, a subsidiary of Franklin Templeton, in August 2025 after he was placed on leave. The Justice Department notified the company last year that it wouldn't file any charges against the investment firm, the company said last year.
"Western Asset was not party to Ken Leech's case therefore is not in a position to comment on the dismissal of charges or the plea agreement he has reached with the DOJ," a spokesperson for the company said.
Write to Joseph De Avila at joseph.deavila@wsj.com
(END) Dow Jones Newswires
June 12, 2026 14:10 ET (18:10 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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