Macro Opps

Leech was a dominant presence at Wamco for years and oversaw three of the firm’s main fixed-income strategies: Core, Core Plus and Macro Opportunities, which all at various moments had tens of billions of dollars in client assets.

The SEC accuses Leech of using the structure of the funds to “maximize the performance” of the portfolios for Wamco and “increase his own bonus compensation.”

Leech’s annual bonus ranged from $28 million to $30 million per year between 2018 and 2020 when the firm was performing well, but dropped to $21 million in 2022 after its performance began to slump, the SEC said. In 2021, Leech’s cherry-picking “increased dramatically,” the agency said, to the benefit of portfolios that earned higher revenue.

In 2023, according to the SEC, he increased his deferred compensation in the Macro Opps strategy while dropping the amount in the other two strategies. In one month alone, March 2023, he boosted his investment in Macro Opps to about $19 million from about $142,000, the agency said.

Leech joined Wamco in 1990 and became CIO eight years later. In the following two decades, he earned a reputation for making bold and often successful calls on interest rates and credit risk that helped build Wamco into a fixed-income giant. At the end of September, it had $353 billion in assets under management, down about $28 billion from the month before.

But Wamco hit a stretch of poor returns starting in late 2021 when Leech predicted the Federal Reserve would take its time raising rates. Investors pulled money as the firm’s returns trailed those of its peers.

Last October, Wamco began reviewing about 17,000 trades conducted by Leech between 2021 and 2023 after a company insider flagged abnormalities in the allocations, Bloomberg previously reported. The SEC and Justice Department probes followed.

Leech was charged with investment adviser fraud and securities fraud, each of which carries a maximum sentence of 20 years in prison; commodity trading adviser fraud and commodities fraud, both of which carry a top punishment of 10 years; and making false statements, which has a maximum penalty of five years.

Leech received a summons to appear in federal court in Manhattan by Dec. 6.

(Updates with further detail from SEC complaint and statement from prosecutors)

Most Read from Bloomberg Businessweek

• What Happens When US Hospitals Go Big on Nurse Practitioners

• Why the Flying Experience Feels So Much Worse

• The Charm Bracelet Shop That Keeps Going Viral

• Clear’s Dominance in Airports Could Be Coming to an End

• An Airline’s Florida Resort Dreams Look More Like a Nightmare

©2024 Bloomberg L.P.