:max_bytes(150000):strip_icc()/GettyImages-1233256480-c6cd0d13b1cc43d6b4e71bec194d3841.jpg "Franklin Resources shares fall as SEC investigates co-CIO of billion unit")
Key findings
- Ken Leech, co-CIO of a unit of Franklin Resources, took a leave of absence after receiving a Wells notice from the Securities and Exchange Commission (SEC).
- The exit came as the company and federal regulators investigated certain past trading allocations in some of Western Asset Management’s accounts.
- Western Asset said it had closed its Macro Opportunities Fund in the “best interests” of clients following Leech’s departure.
Franklin Resources (BEN) was the worst-performing stock in the S&P 500 on Wednesday after the investment manager reported that Ken Leech, co-chief investment officer (CIO) of its Western Asset Management unit, was on leave following a Wells notice from the Securities and Exchange Commission (SEC).
Western Asset Management said in a filing with the U.S. Securities and Exchange Commission (SEC) that due to Leech’s departure, it had concluded that it was “in the best interests of clients” to close its Macro Opportunities Fund, which had approximately $2.0 billion in assets under management as of July 31.
Franklin announced an internal investigation last month
In a regulatory filing last month, Franklin Resources said it had opened an internal investigation into “certain past Treasury derivatives trading allocations in select managed accounts of Western Asset Management.” It said the company was also cooperating with parallel government investigations by the SEC and the U.S. Department of Justice (DOJ). Franklin Resources added on Wednesday that it would “take appropriate action” following its investigation.
Western Asset said co-CIO Michael Buchanan, who shared the position with Leech, will now assume the role of CIO.
Franklin Resources shares fell 8% to $20.81 at 2:45 p.m. ET on Wednesday, their lowest since November 2020. They are expected to fall 30% by 2024.
