The move comes after Ken Leech, the former top investment executive, was notified by the U.S. Securities and Exchange Commission (SEC) of impending civil charges against him.

Effective immediately, Michael Buchanan will take over as the new Chief Investment Officer, assuming responsibility for overseeing the investment strategies and operations of Western Asset Management. Ken Leech, who is facing potential civil charges, has been placed on a leave of absence.

The $2 billion Macro Opportunities strategy fund will be shuttered in the wake of Ken Leech's departure. Western Asset Management is collaborating with "parallel government investigations" subsequent to initiating an internal investigation involving trade allocations related to Treasury derivatives within certain accounts managed by the company.

As a result of the unsettling news, Franklin Templeton's shares experienced a significant drop of over 12% to $19.78, marking the largest daily percentage decline in almost four years. Reports from Bloomberg indicate that federal prosecutors from the Southern District of New York are also examining allegations of favored accounts receiving winning trades, a practice known as "cherry-picking."

Both Franklin Templeton and the Southern District of New York were not immediately available to comment on the matter. Meanwhile, the SEC declined to provide any statements regarding the ongoing investigation.

In a statement, President and CEO of Western Asset Management, Jim Hirschmann, expressed confidence in the newly appointed Chief Investment Officer, Mike Buchanan, stating that his leadership, extensive experience, and dedication to the company would ensure a smooth transition for both clients and the team.

As Western Asset Management navigates the challenges posed by the investigations, the investment management firm remains committed to addressing the issues at hand and upholding its reputation as a trusted player in the financial industry.