Western Asset Management, part of Franklin Templeton, is to close a US$2 billion fund and has replaced its chief investment officer following a regulatory probe into the use of Treasury derivatives.
Michael Buchanan is taking over as CIO, replacing Ken Leech who is on a leave of absence after the US Securities and Exchange Commission stated that he faces civil charges.
Western Asset Management will said it was also closing its $2 billion Macro Opportunities strategy fund, adding it was co-operating with the “parallel government investigations” into what was going at the fund.
Bloomberg reported that Southern District of New York prosecutors are also investigating allegations of favouring specific accounts.
Fund giant Franklin Templeton shares slumped more than 12% yesterday.
"We are confident Mike's leadership, extensive experience, and deep commitment to Western Asset will ensure not only a seamless transition, but also that our clients and our team are in good hands," Western Asset Management chief executive Jim Hirschmann said in the statement.