Ken Leech, former star bond investor at Franklin Templeton's Western Asset Management, pleaded guilty to obstructing an investigation into alleged 'cherry-picking' of trades for favoured portfolios. Franklin suffered well over $150bn in redemptions from its Western business since Leech was charged in 2024, when the subsidiary's assets under management totaled $272bn. The group also agreed to a $100mn settlement with the Securities and Exchange Commission days before Leech's plea.

"When something like that comes along, your job is to deal with it while also keeping the business moving forward," Franklin's chief executive Jenny Johnson said. "We obviously lost a fair bit of assets there, but now we have a lot of clients that are ready to re-engage."

Leech was charged by US prosecutors with criminal fraud in November 2024 for allegedly orchestrating a $600mn scheme to improperly allocate trades to particular portfolios at Western. With his obstruction plea, he avoided a trial set to start on June 15 and — under an agreement with the US Justice Department — the other charges were dropped.

While Western's redemptions have moderated this year, overall Franklin flows have turned consistently positive over the past three quarters. Analysts noted Franklin — one of the world's largest active investors, with $1.8tn under management — appeared well positioned in an environment where scale has become critical for success. Fuelled by takeovers, the group has extended its reach across both public and private markets, giving it a head start in a race where many are now trying to catch up.