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Franklin Resources (BEN) falls 12.5% Wednesday on SEC Probe of Western Asset Management CEO
Franklin Resources can’t seem to get out of their own way. They’ve acquired a lot of other firms during the past 5 decades. My early 403-B in the ‘70s was with Templeton Funds which was later merged into Franklin. Sir John Templeton, who founded Templeton Funds and was a class act himself, would not be cheered by this news.
Ken Leech, co-CIO, began a leave of absence after receiving a Wells notice from the SEC. John Bellows (head of broad markets team) suddenly left Western Asset on 05/01/2024. These are substantial developments regarding key personnel at Western Asset. https://www.morningstar.com/funds/sudden-exit-ken-leech-western-asset
”At this point, we know little about the shakeup at Western Asset Management. Leech’s departure comes just a few months after another key leader, John Bellows, abruptly left the firm. Like Leech, Bellows was thought to be a key part of the firm’s long-term plans. His unexpected exit in May was a blow, especially now that Leech is no longer in the picture, and there has been some fallout from his departure. Franklin noted in its recently filed 10-Q that it launched an internal investigation into certain past trade allocations involving treasury derivatives in select Western Asset-managed accounts and is currently cooperating with parallel government investigations that led to the issuance of the Wells Notice to Leech. The firm said it does not expect to take action until the investigation is concluded. That said, following Leech’s leave of absence, Franklin decided to close his Macro Opportunities Strategy fund, which had around $2 billion in AUM at the end of last month. All this could lead to a loss of confidence for a fixed-income firm that caters primarily to institutional clients, who are known to cease relationships following the departure of key personnel and/or reports of government investigations.”
Link to above story“ Franklin: Leech’s Departure and Ongoing Investigations Will Weigh on Fixed-Income Flows”
Separately, Bloomberg today is reporting heavy redemptions from WAMCO funds from retail investors.
More from Bloomberg (excerpted August 28):
“Wamco, a unit of Franklin Resources Inc., said it’s cooperating with investigations by the US Department of Justice and the Securities and Exchange Commission. Those probes are focused on whether it favored some clients over others — cherry-picking who got more profitable trades, according to people with knowledge of the matter … The trades involved Treasury derivatives in Wamco-managed accounts and unrealized first-day gains and losses, the person familiar with the company said. ”
It's been rumored that the issue might involve distributing futures trades/positions unequally among privately managed accounts. I haven't been able to verify that so I shot first thinking that I could always buy my holding back if I wanted to.
It's been rumored that the issue might involve distributing futures trades/positions unequally among privately managed accounts. I haven't been able to verify that so I shot first thinking that I could always buy my holding back if I wanted to.
I thought about shooting. WEA continues to do well. If folks flee I’d expect to see the discount widen. Hasn’t happened from what I can tell. But over time, I presume the management of the fund could deteriorate. I’ll guess not many will remember this episode a few months out. Hopefully someone qualified will step in to fill the shoes of the departed.
Comments
John Bellows (head of broad markets team) suddenly left Western Asset on 05/01/2024.
These are substantial developments regarding key personnel at Western Asset.
https://www.morningstar.com/funds/sudden-exit-ken-leech-western-asset
”At this point, we know little about the shakeup at Western Asset Management. Leech’s departure comes just a few months after another key leader, John Bellows, abruptly left the firm. Like Leech, Bellows was thought to be a key part of the firm’s long-term plans. His unexpected exit in May was a blow, especially now that Leech is no longer in the picture, and there has been some fallout from his departure. Franklin noted in its recently filed 10-Q that it launched an internal investigation into certain past trade allocations involving treasury derivatives in select Western Asset-managed accounts and is currently cooperating with parallel government investigations that led to the issuance of the Wells Notice to Leech. The firm said it does not expect to take action until the investigation is concluded. That said, following Leech’s leave of absence, Franklin decided to close his Macro Opportunities Strategy fund, which had around $2 billion in AUM at the end of last month. All this could lead to a loss of confidence for a fixed-income firm that caters primarily to institutional clients, who are known to cease relationships following the departure of key personnel and/or reports of government investigations.”
Link to above story “ Franklin: Leech’s Departure and Ongoing Investigations Will Weigh on Fixed-Income Flows”
Separately, Bloomberg today is reporting heavy redemptions from WAMCO funds from retail investors.
More from Bloomberg (excerpted August 28):
“Wamco, a unit of Franklin Resources Inc., said it’s cooperating with investigations by the US Department of Justice and the Securities and Exchange Commission. Those probes are focused on whether it favored some clients over others — cherry-picking who got more profitable trades, according to people with knowledge of the matter … The trades involved Treasury derivatives in Wamco-managed accounts and unrealized first-day gains and losses, the person familiar with the company said. ”
regarding the Western Asset Management situation.
https://www.msn.com/en-us/money/savingandinvesting/franklin-resources-has-a-problem-on-its-hands-what-investors-need-to-know/ar-AA1q1FZY