A settlement filed in a US court would return $103 million to investors whose portfolios were allegedly stuffed with losing trades by one of America’s best-known bond managers.
The United States Securities and Exchange Commission (SEC), the regulator that polices American financial markets, has asked a court to approve a final settlement with a former senior executive of a major investment firm accused of steering winning trades to favoured clients and losing trades to others.
The filing, announced on 6 October 2026 in Washington D.C., targets Stephen Kenneth Leech II, known as Ken Leech, the former co-chief investment officer of Western Asset Management Company LLC, a registered investment adviser.
What he is accused of doing
According to the US Securities and Exchange Commission, which first charged Leech in a complaint filed in November 2024, the scheme ran from at least January 2021 to October 2023.
The regulator alleges Leech placed trades but then held off on deciding which client portfolios they belonged to until around or after futures markets had set their daily settlement prices. That delay let him see whether a trade had moved up or down before assigning it.
The result, the SEC says, was that hundreds of millions of dollars in first-day gains went disproportionately to favoured portfolios, while a similar scale of first-day losses was pushed onto disfavoured ones. In the industry this practice is known as "cherry picking".
The terms of the settlement
Leech has consented to the judgment without admitting the allegations. If the court approves it, he would pay a $3 million penalty, be barred from serving as an officer or director of a public company, and be permanently restrained from breaching the antifraud sections of US securities law. He has also agreed to a separate bar from associating with the industry, which is still to come.
The firm itself settled earlier. In June 2026, the SEC ordered Western Asset to pay a $100 million civil penalty and set up a Fair Fund, a pot of money used to compensate investors who lost out. Together with Leech's penalty, that brings the total heading back to harmed investors to $103 million.
Brent Wilner, Associate Director of the SEC's Los Angeles Regional Office, described the behaviour of Leech and Western Asset as "an egregious breach of fiduciary obligations to their clients".
A criminal case too
The regulatory action is not the only trouble Leech faces. Also in June 2026, he pleaded guilty in the US District Court for the Southern District of New York to obstruction of justice, over false and misleading testimony he gave the SEC during its investigation. Sentencing is expected within weeks.
The SEC credited the US Attorney's Office for the Southern District of New York and the Federal Bureau of Investigation (FBI) for their help.
Why Ghanaians should take note
For Ghanaians in the United States who hold retirement accounts or managed investment portfolios, the case is a reminder that fund managers owe a legal duty to put client interests first, and that US regulators do pursue senior figures personally, not just their firms.
