Western Asset Management Company (WAMCO) is facing allegations of fraud, causing significant losses to investors. WAMCO lawsuits are sure to follow, as Ken Leech of WAMCO is charged with:
- Multiple counts of fraud
- Falsifying statements
As a popular asset management company, the impact on disfavored clients hit at least $600 million on long-term investments and pension funds.
SEC Charges WAMCO’s Former Co-CIO with Fraud
Stephen Kenneth Leech (Ken Leech), the former co-CIO of WAMCO, pled not guilty to fraud charges. The charges allege that he cherry-picked how to allocate $600 million to enrich portfolios he favored and caused significant losses to those he did not.
Allegations from the SEC suggest that between January 2021 and October 2023, Leech would:
- Conduct trades with brokers.
- Wait until after the trading day to allocate the trades.
The practice allowed Leech to analyze first-day gains and allocate them to favored portfolios while allocating first-day losses to portfolios he didn’t favor. Leech’s actions, if proven to be true, enriched him while breaking the fiduciary duty that he had to his clients.
Complaints suggest that the initial WAMCO investigation found evidence of cherry-picking dating back to 2021, but the fraud goes back to at least this time period.
The SEC’s Acting Director Sanjay Wadhwa states, “Investment advisers are at all times obliged to perform their functions, including trade allocations, in a manner that puts their clients’ interests first. As alleged, Leech abdicated that all-important duty for years.”
Client withdrawals and legal liabilities also harmed WAMCO itself, which experienced:
- $10 billion in client withdrawals and losses in 2021
- $30 billion in client withdrawals and losses in 2022
- $55 billion in client withdrawals and losses in 2023
SEC officials suggest that the Core and Core Plus funds were given unfavorable trades, and the Macro Opportunities fund was given favorable allocations. Western Asset Management Company news on compliance and training requires trades to be allocated promptly because allocating trades based on first-day performance put Leech in a position to make up for losses.
Favoritism led to $600 million sent to the Macro Opportunities fund and the Core Strategies $600 million in first-day losses.
Ken Leech may have personally benefited from the activity by deferring his compensation plan into the Macro Opportunities fund to the tune of $19 million.
Who Can Be Held Liable for Breach of Fiduciary Duty?
Breach of fiduciary duty is a serious allegation and one that was broken if the allegations against Leech are true. Anyone who failed to act in the best interest of clients along with Leech could be held liable.
In cases like this, responsible parties may include:
- Board members
- Directors
- Financial advisors
- Trustees
- Co-fiduciaries
Investors and clients put their trust in asset management companies, and the repercussions can be devastating for clients and the industry. WAMCO clients may hold the firm liable for not preventing the misconduct that took place.
Evidence must be shown that your accounts had irregularities and unfavorable trades, especially on first-day trades.
An attorney from Keller Swan can help you analyze your account statements and determine whether you can take legal action. Claims against the company can prevent future cases of fraud and compensate you for the losses you sustained by the cherry-picking that is alleged to have taken place.
What Damages Are Available to Affected Clients?
Fiduciaries have a duty to act in the best interests of their clients. When they fail in this duty, clients may have legal recourse and the ability to recoup financial losses.
Clients impacted by a breach of fiduciary duty may be eligible for compensation, including:
- Out-of-pocket losses
- Lost investment profits
- Punitive damages if the misconduct was intentional
Determining which damages are relevant to your case is complex and will depend on your unique circumstances. Consulting with an experienced attorney is key. An attorney can review your individual case details and paint a clearer picture of which damages will apply.
Proving Damages
If you believe you were a victim of fraud as a WAMCO client, you must be able to prove four key things in order to file a lawsuit and recover compensation:
- You were owed a fiduciary duty.
- The defendant violated this duty by failing to act in your interests.
- As a result, you suffered financial losses.
- Your losses were a direct result of the breach of fiduciary duty.
An attorney can help you determine whether your case fits these criteria and navigate the highly complex process of seeking compensation for your losses.
How an Attorney Can Help You Navigate WAMCO Lawsuits
If you were a WAMCO client and believe you were impacted by the alleged misconduct, consulting with an experienced attorney should be your first step.
An attorney experienced in securities law can:
- Review your account to identify trade allocation discrepancies or evidence of unfavorable trades.
- Evaluate your case and determine whether there are grounds to take legal action.
If you do have a case, your attorney can help you find the best course of action to take and pursue compensation for your losses.
Depending on the circumstances, it may be possible to negotiate a favorable settlement without filing a lawsuit. However, if the other party is not willing to compromise, a lawsuit may be necessary.
Lawsuits of this nature are complex and require the expertise of an attorney with a track record of success.
How Keller Swan Can Help You Take Control of Your Financial Future
When asset management companies engage in misconduct, they should be held accountable for their actions. As a client, you may have a right to seek compensation.
At Keller Swan, we know how overwhelming and emotionally challenging it can be to navigate lawsuits involving securities fraud and misconduct.
Cases such as these are highly complex and require the right expertise.
Our firm has a proven track record of success and has handled many high-profile securities fraud cases. We’ll conduct an investigation and develop a tailored legal strategy to pursue the compensation you are entitled to.
If you are searching for an experienced WAMCO attorney near me, contact us today to schedule a free consultation and learn more about your options.