According to the Securities and Exchange Commission (SEC), Western Asset Management Company has agreed to pay more than $21 million to settle sanctions for causing clients investment losses.
Western Asset, a subsidiary of Legg Mason, allegedly concealed a coding error that resulted in investment losses for approximately 100 clients. The coding error would apparently cause restricted private placements to be allocated into the accounts of ERISA clients. The private placements were off-limits to ERISA plans. The private placements plummeted in value yet the company purportedly waited nearly two years to notify the clients.
In addition, the SEC found that Western Asset allegedly engaged in a type of cross trading that was deemed illegal. The SEC order found that during the financial crisis Western Asset allegedly was required to sell mortgage-backed securities for clients that wanted to liquidate their accounts or were no longer eligible to hold those types of securities. according to the SEC, Western Assets prearranged sale-and-repurchase cross trades for clients at the bid price rather than a price between the bid price and the ask price. Reportedly this denied the selling client approximately $6.2 million in market savings.
The foregoing information, which is publicly available on SEC’s website, here, is being provided by The White Law Group. The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Boca Raton, Florida.
Brokerage firms have fiduciary duty to act in the best interest of their clients. When brokerage firms violate security laws they can be liable for investment losses. If you have reason to believe that your brokerage firm has engaged in activities that violate the securities industry’s rules and regulations, please call the securities attorneys of The White Law Group at (312)238-9650 for a free consultation.
To learn more about The White Law Group, visitwww.WhiteSecuritiesLaw.com.