The company replaced Ken Leech, who was serving as the co-chief investment officer of its Western Asset Management unit. The move came as the CIO had taken a leave of absence after getting a Wells Notice from the Securities and Exchange Commission (SEC).
In a July 2024 regulatory filing, Franklin Resources announced the initiation of an internal investigation into "certain past trade allocations of treasury derivatives in select Western Asset Management" managed accounts.
It explained that Western Asset Management was cooperating with parallel government investigations by the SEC and the U.S. Department of Justice (DOJ). On Aug 21, BEN stated that it would "take action as warranted" based on the findings of the investigations by the SEC and DOJ.
Currently, BEN carries a Zacks Rank #3 (Hold).
According to a Bloomberg report from Aug 21, federal prosecutors in the Southern District of New York are also investigating allegations of "cherry-picking" where winning trades were allegedly allocated to favored accounts.
Other Finance Stocks Facing SEC Investigation
On Aug 2, Wells Fargo & Company WFC announced that it was under government authorities' investigations on issues related to anti-money laundering (AML) and sanctions programs.
WFC disclosed this AML and Sanctions program inquiry in its second-quarter SEC filing. In the same filing, the bank mentioned that it is in "resolution discussions" with the U.S. SEC about an investigation related to the cash sweep options it provides to new investment advisory clients. The bank further added in its SEC filing that "There can be no assurance as to the outcome of these discussions."
In May, Robinhood Markets, Inc. HOOD received a notice from the SEC that its crypto business — Robinhood Crypto — could face an enforcement action. The notice comes as a result of the violation of registrations as a securities broker and transfer agent.
HOOD stated that a potential action from the SEC could be a civil complaint and a public court proceeding that may end up with a fine, a cease-and-desist order, and other restrictions on crypto operations.
