Western Asset Co-CIO Exits Firm Amid SEC Investigation

Ken Leech, the driving force behind Western Asset and recently co-CIO, is stepping down amid ongoing investigations from the US Securities and Exchange Commission and the Department of Justice, while Michael Buchanan is taking over as sole CIO.

The investigations concern US Treasury derivative allocations across an undisclosed number of Western accounts. Parent firm Franklin Templeton, which acquired Western in 2020, first reported these investigations in July 26, 2024, regulatory filings. Western said it is cooperating fully with both the SEC and DOJ investigations, which are running in parallel with its own internal investigation, launched in October 2023.

According to Western, the allocations in question were made between 2021 and 2023 by Leech, who began a leave of absence effective immediately after the SEC’s Wells Notice. Leech joined Western in 1990 and was instrumental in its ascension over the ensuing three decades, not least because of his predilections for bold interest-rate bets. His influence on portfolio positioning as CIO or more recently co-CIO since 1998 is notable, therefore, regardless of whether he was formally listed as a portfolio manager on a particular strategy.

Buchanan joined Western in 2005 and previously served as co-CIO alongside Leech, inheriting that role in September 2023 when Western’s sprawling fixed-income platform had about $322 billion in discretionary assets. Amid performance woes, the US fund lineup has since suffered more than $10 billion in outflows.

Leech’s departure isn’t the first big personnel loss Western has had to absorb this year. John Bellows’ sudden exit on May 1, 2024, was a significant blow. Bellows’ contributions were extensive, most notably as the firm’s Federal Reserve expert and head of its broad markets team, the latter of which included core and core-plus portfolio management duties.

Buchanan must now carve out a path for Western without Leech, who built the firm, and without Bellows, who at the start of this year was seen as a key part of its future.