SEC Seeks Consent Judgment Against Ex-Western Asset CIO Ken Leech

The Securities and Exchange Commission has asked a court to enter a final judgment by consent against Stephen Kenneth Leech II, the former co-chief investment officer at Western Asset Management Company LLC, according to the agency. The request stems from a case focused on alleged cherry picking at the registered investment adviser. The SEC's action signals it is moving toward resolving its claims against Leech.

Leech formerly shared top investment responsibilities at Western Asset, a registered investment adviser. A consent judgment typically means the parties have agreed to a resolution, but it still requires the court's approval before it becomes final. The SEC did not provide additional detail beyond its request.

Cherry picking usually refers to allocating profitable trades to favored accounts while assigning losing or less favorable trades to others. Regulators view the practice as a serious conflict-of-interest violation because it can unfairly benefit some clients at the expense of others and damage confidence in investment advisers.

The case is part of the SEC's broader scrutiny of how investment advisers handle trade allocations and conflicts. If the court enters the proposed judgment, it would conclude this enforcement matter against Leech. Western Asset has been a prominent fixed-income manager, making the allegations notable for industry observers.