The Securities and Exchange Commission said October 6, 2026 that it moved for a consent final judgment against Stephen Kenneth Leech II, former co-chief investment officer of Western Asset Management Company LLC. The SEC charged him in November 2024 with a multi-year cherry-picking allocation scheme.
The SEC alleges that from at least January 2021 through October 2023, Leech placed trades and then delayed allocations until near or after futures markets set daily settlement prices. That let him see price moves and steer hundreds of millions of dollars in first-day gains to favored portfolios and a similar amount of losses to disfavored ones.
Without admitting the allegations, Leech consented to a $3 million penalty, an officer-and-director bar and a permanent injunction against violating antifraud provisions, subject to court approval. He also agreed to a forthcoming associational bar. In June 2026 the SEC ordered Western Asset to pay a $100 million penalty and set up a Fair Fund for investors in the disfavored portfolios.
The SEC says the two resolutions together will return $103 million to harmed investors if the court approves. Leech pleaded guilty in June 2026 to obstruction of justice over false testimony to the SEC, with sentencing expected in the coming weeks.