(Bloomberg) -- Federal prosecutors in New York are investigating whether a Western Asset Management executive allocated winning trades to favored accounts, as part of a criminal probe into a practice known as “cherry-picking.”
The probe is being led by the US Attorney’s Office in Manhattan, which is investigating a trading practice that involves allocating lucrative trades to favored clients and less profitable trades to others, according to people familiar with the matter. The US Securities and Exchange Commission is also conducting a separate probe.
The investigation is still ongoing and no charges have been filed against the company or individual employees.
Western Asset on Wednesday said that its co-chief investment officer Ken Leech, who manages some of the largest bond strategies in the US, was taking an immediate leave of absence after receiving a Wells notice from the SEC. Western Asset said last month that it had been alerted to SEC and DOJ investigations.
A spokesman for the Southern District of New York US Attorney’s Office declined to comment. A spokesman for the SEC didn’t immediately respond to a request for comment.
Western Asset, which is also closing its $2 billion Macro Opportunities strategy, named Michael Buchanan as sole CIO.
“As disclosed in July, Western launched an internal investigation and is cooperating with government investigations,” said Jeaneen Terrio, a spokesperson for Western Asset and its parent company, Franklin Resources Inc.
--With assistance from Sabrina Willmer.
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