SEC seeks $103M judgment against ex-Western Asset co-CIO over cherry-picking

The SEC moved for entry of a final judgment by consent against Stephen Kenneth Leech II, the former co-chief investment officer of Western Asset Management, whom the agency had charged in a multi-year trade-allocation scheme. The SEC alleged that from January 2021 through October 2023, Leech placed trades and then routinely delayed allocations until near or after futures markets set daily settlement prices, allowing him to disproportionately allocate gains to favored portfolios and losses to disfavored portfolios. Without admitting the allegations, Leech consented to a final judgment, subject to court approval, requiring him to pay a $3 million penalty, accept an officer-and-director bar, and be permanently enjoined from violating antifraud provisions. Leech separately pleaded guilty in June 2026 to obstruction of justice for false testimony he gave the SEC, with sentencing still to come. The SEC said the combined resolution would return $103 million to harmed investors.

Why it matters. The case shows continued SEC pursuit of trading-allocation fraud by investment advisers and could inform parallel private claims by advisory clients who lost money in the disfavored portfolios.