Ex-Wamco CIO Ken Leech Charged Over Trade Allocation Scheme

-- Ken Leech, the former co-chief investment officer for Western Asset Management Co., was accused by US authorities on Monday of improperly allocating trades to favored clients in a dramatic turn for the once-star trader. As alleged, Leech abdicated that all-important duty for years.” Jonathan S. Sack, a lawyer for Leech, said the “unfounded” charges “ignore key facts, including the fundamental differences between distinct fixed-income strategies and the irrelevance of first-day performance to managing these strategies.” “Ken Leech has an unblemished record over nearly 50 years as a trader and portfolio manager,” Sack said in a statement. The SEC accuses Leech of using the structure of the funds to “maximize the performance” of the portfolios for Wamco and “increase his own bonus compensation.” Leech’s annual bonus ranged from $28 million to $30 million per year between 2018 and 2020 when the firm was performing well, but dropped to $21 million in 2022 after its performance began to slump, the SEC said. In 2021, Leech’s cherry-picking “increased dramatically,” the agency said, to the benefit of portfolios that earned higher revenue.