S. Kenneth Leech II, former chief investment officer of Western Asset Management Co. (WAMCO), pleaded guilty to obstructing a Securities and Exchange Commission investigation.
The probe centered on a cherry-picking scheme involving trade misallocations between January 2021 and October 2023.
Leech allegedly directed trades with $600 million in first-day net gains to favored client accounts.
Other clients were assigned approximately $600 million in net losses during the same period.
The plea deal allows Leech to avoid a scheduled trial on more severe fraud charges.
Sentencing for the former executive is scheduled for September 21, 2026.
WAMCO parent Franklin Resources paid a $100 million SEC penalty in June to resolve related oversight failures.