Former Western Asset Management chief investment officer Ken Leech pleaded guilty Friday to a single count of obstructing a Securities and Exchange Commission investigation, days before his federal trial in New York’s Southern District was set to begin.
Leech had been charged in 2024 in a scheme in which prosecutors said he cherry-picked trades to favor some clients while shifting losses to others. According to the Justice Department, Leech assigned over $600 million in gains to preferred accounts and $600 million in losses to other accounts. The alleged scheme ran from January 2021 through October 2023, prosecutors said. Leech would place trades and then wait until later in the day — after seeing how the trades performed — before allocating them to client accounts.
The plea avoids a trial that was scheduled to start Monday. Leech had been facing five felony counts in total, including investment adviser fraud and securities fraud, each carrying a maximum sentence of 20 years in prison. The obstruction charge, which relates to an SEC investigation in March 2024, carries a maximum sentence of five years.
Lawyers for Leech declined to comment. The Justice Department did not immediately respond to a request for comment.
Leech, a longtime bond trader who had been a star at Western Asset Management, retired from the firm in August 2025 after being placed on leave. Western Asset Management is a subsidiary of Franklin Templeton. The Justice Department notified the company last year that it would not file charges against the investment firm, the company said at the time.
“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.