Updated Nov 25, 2024 - Business

Bond manager Ken Leech charged with $600 million fraud

Ben Berkowitz

Ken Leech, former co-chief investment officer of WAMCO, speaking at an event. — Ken Leech speaks at an event. (Photo: Patrick T. Fallon/Bloomberg via Getty Images)

Federal prosecutors charged Ken Leech, one of the world's best-known bond fund managers, with a $600 million fraud on Monday.

Why it matters: Leech, the former co-chief investment officer of Western Asset Management Co. (WAMCO), was long known as "the other bond king" (besides Bill Gross) for his influence over the fixed-income market.

WAMCO at one time managed more than $300 billion in assets for clients, and Leech directed the firm's investment strategies.

Catch up quick: Manhattan federal prosecutors allege Leech defrauded Western Asset's clients from 2021 to late 2023 by "cherry-picking" trades, or assigning favorable trades to certain portfolios and losing trades to others.

The Securities and Exchange Commission also filed civil fraud charges against Leech.
Western's parent company, Franklin Resources, launched an internal investigation in July, and put Leech on leave in August.
"Mr. Leech received no benefit from the alleged misconduct. We are confident that he acted properly at all times, and Mr. Leech will defend himself vigorously," his attorney, Jonathan Sack of Morvillo Abramowitz, said in a statement.

Zoom in: The Wall Street Journal reported earlier this month that WAMCO had lost about 15% of its assets since the company disclosed the probe

Editor's note: The story has been updated with comment from Leech's attorney.

Add Axios on Google

Bond manager Ken Leech charged with $600 million fraud

What to read next