In a case highlighted as an egregious abuse of power, the SEC filed fraud charges against Stephen Kenneth Leech, the former co-chief investment officer (CIO) of registered investment adviser Western Asset Management Company LLC (WAMCO), for engaging in a multi-year scheme to allocate favorable trades to certain portfolios, while allocating unfavorable trades to other portfolios, a practice known as cherry-picking. The case was filed in U.S. District Court for the Southern District of New York. The U.S. Attorney’s Office for the Southern District of New York announced parallel criminal charges against Leech. This case represents a calculated cherry-picking scheme by a high-level employee that was allowed to continue for an extended period of time, in direct violation of the firm’s compliance policies, procedures, and training. It should serve as an important reminder to investment advisers and private fund managers regarding potential abuses that can be perpetrated by an employee at any level. The SEC expects investment advisers to adopt and actively enforce robust controls with respect to trade allocations to avoid, monitor for, and promptly detect and address potential cherry-picking.