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Franklin Resources, Inc.

Company NameFranklin Resources, Inc.
Stock SymbolBEN

On August 21, 2024, Franklin disclosed that the co-Chief Investment Officer of its subsidiary, Western Asset Management Company (“Western Asset”) is on a leave of absence after recently receiving a Wells Notice from the U.S. Securities and Exchange Commission in relation to an investigation into “certain past trade allocations involving treasury derivatives in select Western Asset-managed accounts.” Additionally, the Company stated that it “has determined that closing its Macro Opportunities strategy (approximately $2.0 billion in AUM as of [July 31, 2024]) is in clients’ best interests.”

On this news, Franklin’s stock price fell $2.84, or 12.6%, to close at $19.78 per share on August 21, 2024, thereby injuring investors.

 

On November 25, 2024, an indictment by the United States Attorney for the Southern District of New York was unsealed, charging Western Asset’s former CIO S. Kenneth Leech II of securities fraud, investment adviser fraud, commodity trading adviser fraud, commodities fraud, and making false statements. Specifically, between 2021 and 2023, Mr. Leech engaged “in a criminal cherry-picking scheme to favor certain clients at the expense of others, assigning over $600 million of gains to favored clients and over $600 million of losses to disfavored clients.” 

 

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