WAMCO Names New CEO as Former CIO Faces SEC Fraud Charges

Embattled investment manager Western Asset Management Co. announced Tuesday the appointment of Thomas Gahan as president and CEO of the $330 billion fixed-income manager, effective immediately. Gahan succeeds James Hirschman III, who will be elevated to chairman of WAMCO.

The management shakeup comes one week after former WAMCO CIO Ken Leech was charged with fraud by the Securities and Exchange Commission.

Gahan founded credit manager Benefit Street Partners in 2008 and later joined Franklin Templeton as head of its alternatives business following the firm’s 2019 acquisition of Benefit Street.

Franklin Templeton is the parent company of WAMCO. In addition to his duties at WAMCO, Gahan will continue his role as chairman of BSP.

“I look forward to stepping into my new role as Chairman and working closely with Tom to ensure a smooth transition for our valued clients in this next chapter of our firm,” Hirschman said in a statement. “It has been a privilege to serve as President and CEO of Western Asset for over two decades, and I am confident that Tom is the right person to lead us as we strengthen our client offerings.”

The SEC complaint alleges that Leech favored some client portfolios over others and engaged in cherry-picking, choosing favorable trades for certain clients, while leaving others with losses, allegedly for a three-year period. According to the complaint, favored clients netted hundreds of millions of dollars in gains, with Leech also personally benefiting. Unfavored clients netted a similar amount in losses. 

Leech is fighting the charges and calls them unfounded via his legal representation.

Multiple pension funds have terminated WAMCO as a manager, including the Chicago Teachers’ Pension Fund and the Illinois Municipal Retirement Fund.