Stephen Kenneth Leech
U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 26666 / October 6, 2026
Securities and Exchange Commission v. Stephen Kenneth Leech, No. 1:24-cv-09017 (S.D.N.Y. filed Nov. 25, 2024)
SEC Seeks Final Judgment Against Former Western Asset Co-CIO Ken Leech in Cherry Picking Case
The Securities and Exchange Commission today moved for entry of a final judgment by consent against Stephen Kenneth Leech II, the former co-chief investment officer of registered investment adviser Western Asset Management Company LLC, whom the SEC previously charged with a multi-year cherry-picking allocation scheme.
As alleged in the SEC’s November 2024 complaint, from at least January 2021 through October 2023, Leech placed trades and then routinely delayed allocations until near or after futures markets set daily settlement prices, allowing him to observe price movements and disproportionally allocate hundreds of millions of dollars in realized and unrealized first‑day gains to favored portfolios and a similar amount of realized and unrealized first‑day losses to disfavored portfolios.
Without admitting the allegations in the SEC’s complaint, Leech consented to entry of a final judgment, subject to court approval, that would order him to pay a $3 million penalty, impose an officer-and-director bar and permanently enjoin him from violating Section 17(a)(1) and (3) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5(a) and (c) thereunder, Sections 206(1) and (2) of the Investment Advisers Act of 1940, and Section 36(a) of the Investment Company Act of 1940. Leech also agreed to a forthcoming associational bar against him.
In June 2026, the Commission instituted settled public administrative proceedings against Western Asset, ordering the firm to pay a $100 million civil penalty and establishing a Fair Fund to distribute money to affected investors in the disfavored portfolios.
Also in June 2026, Leech pleaded guilty to obstruction of justice charges related to false and misleading testimony he provided to the SEC during its investigation; sentencing will take place in the coming weeks.
The SEC’s investigation was handled by Ronnie Lasky, Brian Fitzpatrick, and Sarah Nilson, all of the Division of Enforcement’s Asset Management Unit, and supervised by Corey Schuster, Chief of the Asset Management Unit, and Brent Wilner, Associate Director of the SEC’s Los Angeles Regional Office. The litigation was supervised by Christopher Colorado and Dan Loss, of the SEC’s New York Regional Office. Assistance was also provided by Jennifer Ferris, Michael Barnes, Thomas Dunn, and Stephen Graham of the SEC’s Division of Economic and Risk Analysis. The SEC acknowledges the assistance of the U.S. Attorney’s Office for the Southern District of New York and the FBI.