Franklin Resources: Criminal Charges Vs Western Asset Not Likely in Leech Case

By Colin Kellaher

Franklin Resources said its Western Asset Management unit likely won't face criminal charges related to alleged fraud by longtime bond investor Ken Leech.

Federal prosecutors late year brought charges against Leech, Western's former chief investment officer, alleging he cherry-picked a series of Treasury derivative trades to favor some clients while shifting losses to others.

In a brief filing with the U.S. Securities and Exchange Commission on Monday, Franklin said it was informed that the Justice Department is prepared to resolve its investigation through a disposition that doesn't require the filing of any criminal charges against Western.

The DOJ alleges that Leech assigned more than $600 million in gains to favored clients and $600 million in losses to others between 2021 and 2023. Leech has denied the allegations.

Franklin in July 2024 disclosed that it had launched an internal investigation into past trade allocations involving treasury derivatives in some Western-managed accounts, and that the SEC and Justice Department had launched parallel investigations. The firm placed Leech on leave the following month.

The disclosures prompted clients to pull at least $100 billion from Western, or more than a quarter of its assets under management, in the second half of 2024.

Franklin on Monday said the Justice Department is still in resolution talks related to the case that require more time to complete due to circumstances not attributable to Western, and that the DOJ "appreciates Western Asset's commitment to full cooperation with the investigation."

Write to Colin Kellaher at colin.kellaher@wsj.com

(END) Dow Jones Newswires

December 15, 2025 07:32 ET (12:32 GMT)