Chicago Public School Teachers’ Pension & Retirement Fund terminated Western Asset Management from its $569 million active domestic core-plus fixed-income portfolio.
The $12.5 billion pension fund’s board approved the termination at its Sept. 19 meeting, a spokeswoman said.
The pension fund’s investment committee had recommended the termination at its Aug. 27 meeting after Western Asset’s parent company Franklin Templeton said the SEC recently had issued a Wells notice to Co-CIO Ken Leech, identifying him as a target of an investigation focusing on “past trade allocations involving Treasury derivatives." Leech has since resigned.
A Franklin Templeton spokesperson declined to comment.
Assets from the termination of Western Asset will be temporarily parked in an existing passive fixed-income portfolio managed by State Street Global Advisors until a search for an active replacement is completed. The timing of such a search has yet to be determined.
As of June 30, the actual allocation to fixed income was 17.7%; the target is 23%.
Investment consultant Callan assisted.
