Fixed-income manager Western Asset Management said its co-chief investment officer Ken Leech recently received a Wells notice from the staff of the U.S. Securities and Exchange Commission, and as a result, Leech has been placed on a leave of absence effective immediately to “focus on the matter,” said an Aug. 21 release from Western Asset.
A Wells notice is a communication from the staff of the SEC to a person involved in an investigation that informs the person the staff has made a preliminary determination to recommend that the commission file an action or institute a proceeding against them, according to the SEC website.
Michael Buchanan has been named the sole chief investment officer of Western Asset. Buchanan had been serving as co-chief investment officer with Leech.
According to a 10-Q filed by Western Asset’s parent corporation, Franklin Resources, on July 26, Western Asset launched an internal investigation into certain past trade allocations involving Treasury derivatives in select Western Asset-managed accounts. Franklin is also cooperating with “parallel government investigations,” the filing noted.
Franklin added in the 10-Q that it will “take action as warranted based on any findings after the conclusion of its investigation.”
In light of Leech’s leave of absence, Franklin has determined that closing its Macro Opportunities strategy, which had approximately $2 billion in assets under management as of July 31, is in clients’ best interests, the Aug. 21 release said.
According to Franklin’s website, Leech led the Macro Opportunities team.
A spokesperson for Franklin declined to comment on the matter surrounding Leech.
A spokesperson for the SEC said the agency “does not comment on the existence or non-existence of a possible investigation.”
Western Asset has more than $381.1 billion in client assets under management.
