Leech assigned successful trades to portfolios aligned with Wamco’s “macro opportunities” strategy while disadvantaging “core” and “core plus” strategies, the Justice Department (DOJ) alleged. These actions harmed institutional and retail investors, including those with pension and savings plans, prosecutors said.
“Leech routinely waited hours after making his trades — often until late in the day — to make his allocations,” allowing him to observe trade performance before deciding, the DOJ said.
Compliance Failures and False Testimony
Leech’s alleged actions violated Wamco’s compliance policies, which required pre-determined trade allocations and swift finalization. Prosecutors said neither Leech nor Wamco disclosed this allocation method to investors.
Leech also testified to the SEC that he planned allocations in advance of trading, a claim prosecutors allege was false. The DOJ noted that after Wamco restricted Leech’s allocation authority in October 2023, the macro opportunities portfolio no longer exhibited its “consistent, pronounced bias toward first-day gains.”
Wamco’s Parent Company Under Scrutiny
Wamco’s parent company, Franklin Resources Inc., disclosed the federal investigations in July after conducting its own internal review of trade allocations involving Treasury derivatives. Leech went on leave in August after receiving a Wells notice from the SEC.
