Ex-Wamco Bond Manager Kenneth Leech Fined $3 Million by SEC After Cherry-Picking Guilty Plea

Kenneth Leech, the former star bond manager who pleaded guilty to obstructing a US Securities and Exchange Commission probe into alleged "cherry-picking," will pay a $3 million fine to settle the regulator's related civil case, the SEC said Tuesday. The fine is in addition to the $100 million civil penalty that his former employer, Western Asset Management Co., or Wamco, agreed to pay in June to resolve SEC charges it failed to properly supervise him. Tuesday's settlement, which requires court approval, would return $103 million to harmed investors. Authorities said Leech's alleged scheme involved more than $600 million and ran from January 2021 to October 2023. He was accused of waiting to see how trades performed on their first day before retroactively allocating profitable ones to favored "Macro Opportunities" portfolios and losing trades to "Core" and "Core Plus" portfolios. Leech pleaded guilty in June to one obstruction charge and could face six to 12 months in prison under recommended federal sentencing guidelines. Prosecutors dropped four fraud charges.