Franklin Resources Investigation and Stock Decline

The situation escalated after Franklin Resources disclosed an internal investigation on July 26, 2024, which focused on past trade allocations of treasury derivatives. This announcement coincided with notifications of concurrent investigations by the SEC and the U.S. Department of Justice. The company’s stock saw an immediate decline of 2.4% following the announcement. Further developments on August 21, 2024, included the placement of WAM’s co-Chief Investment Officer, Ken Leech, on leave after he received a Wells Notice from the SEC. This news triggered a more severe drop of 12.5% in stock value, as reports emerged of a criminal investigation into whether Leech engaged in “cherry-picking” trades to benefit favored accounts.

Investigation Background

• Internal Investigation: Franklin Resources initiated an internal review of trade allocations, which revealed potential misconduct.
• Federal Scrutiny: The SEC and DOJ have begun parallel investigations into the practices at Western Asset Management.

Stock Performance

• Initial Decline: After the July announcement, shares fell from $23.64 to $23.08.
• Subsequent Drop: Following Leech’s suspension in August, shares dropped from $22.62 to $19.78.

Legal Options for Investors

Investors who suffered losses due to these developments are encouraged to seek legal counsel, as Bleichmar Fonti & Auld LLP is actively investigating potential claims against Franklin Resources. The firm operates on a contingency fee basis, meaning no upfront costs for investors. For further information, affected parties can visit BFA Law’s website.