The SEC on Friday, June 5, 2026 imposed a $100 million civil penalty on Pasadena-based investment adviser Western Asset Management Company, LLC, and created a Fair Fund for investors harmed by the firm’s failure to supervise its former co-chief investment officer.
Western Asset consented to the settlement without admitting the findings, the order shows.
The Commission found that Western Asset failed to take reasonable steps to detect and prevent conduct by former co-CIO Stephen Kenneth Leech II, and failed to implement policies designed to prevent Advisers Act violations. The firm managed roughly $179 billion in U.S. assets as of December 2025.
The SEC charged Leech in November 2024 with running a cherry-picking scheme from January 2021 through October 2023. The order says Leech did not document intended allocations before or near the time of his trades, and that the majority of his allocation instructions were entered after the exchange set daily settlement prices, giving him the opportunity to observe market movement before assigning trades to portfolios.
Western Asset was censured, ordered to cease and desist, and must deposit $100 million into escrow within 10 days. The Fair Fund covers current and former investors in the Core and Core Plus strategies.
The order says Western Asset has since conducted an internal investigation, hired outside counsel, and implemented additional trade allocation policies.
