Bronstein, Gewirtz and Grossman, LLC Announces an Investigation Against Franklin Resources, Inc. (BEN) and Encourages Investors to Seek Compensation for Alleged Wrongdoings

Rhea-AI Summary

Bronstein, Gewirtz & Grossman, is investigating potential claims against Franklin Resources, Inc. (NYSE:BEN). The investigation follows news that Franklin's subsidiary, Western Asset Management Company, announced its co-Chief Investment Officer Ken Leech is on leave after receiving a Wells Notice from the SEC. Additionally, Bloomberg reported that federal prosecutors are investigating whether a Western Asset Management executive engaged in 'cherry-picking' trades. This news caused Franklin's stock to drop 12.56%, closing at $19.78 on August 21, 2024. Investors who purchased Franklin securities are encouraged to participate in the investigation.

Positive

• None.

Negative

• Co-Chief Investment Officer Ken Leech placed on leave of absence
• SEC issued a Wells Notice to Ken Leech
• Federal prosecutors investigating potential 'cherry-picking' of trades
• Stock price fell 12.56% following the news

Legal Expert

The investigation into Franklin Resources, Inc. (BEN) and its subsidiary Western Asset Management Company raises significant legal and regulatory concerns. The receipt of a Wells Notice by co-CIO Ken Leech indicates that the SEC is considering enforcement action, which could lead to substantial penalties and reputational damage. The alleged "cherry-picking" practice, if proven, violates fiduciary duties and securities laws.

This situation could potentially result in class-action lawsuits, regulatory fines and increased scrutiny of Franklin's operations. Investors should be aware that such investigations often lead to prolonged legal battles and may impact the company's financial performance and stock valuation in the short to medium term. The immediate 12.56% drop in stock price reflects market concerns about these developments.

Financial Analyst

The investigation into Franklin Resources (BEN) poses significant financial risks for the company. If allegations of "cherry-picking" are substantiated, it could lead to hefty fines, legal settlements and potential client withdrawals. The immediate 12.56% stock drop, equating to about $2.84 per share, indicates substantial investor concern.

Long-term implications may include:

• Increased compliance costs
• Potential loss of institutional clients
• Damage to the company's reputation in the asset management industry

Investors should closely monitor upcoming financial reports for any provisions for legal expenses or signs of asset outflows. The situation may also impact Franklin's ability to attract and retain top talent, potentially affecting future performance.

Market Research Analyst

This investigation could have ripple effects across the asset management industry. If widespread "cherry-picking" practices are uncovered, it may lead to increased regulatory scrutiny and stricter compliance requirements for all players in the sector. Competitors might benefit in the short term from Franklin's troubles, potentially gaining market share.

However, the broader impact could be a loss of investor confidence in actively managed funds, accelerating the trend towards passive investing. This situation highlights the importance of robust internal controls and ethical practices in the financial services industry. Investors may now place greater emphasis on firms with strong governance structures and transparent operations when selecting asset managers.

NEW YORK CITY, NY / ACCESSWIRE / August 26, 2024 / Bronstein, Gewirtz & Grossman, LLC is investigating potential claims on behalf of purchasers of Franklin Resources, Inc. ("Franklin" or "the Company") (NYSE:BEN). Investors who purchased Franklin securities are encouraged to obtain additional information and assist the investigation by visiting the firm's site: bgandg.com/BEN.

Investigation Details

On August 21, 2024, Franklin subsidiary Western Asset Management Company issued a press release announcing that co-Chief Investment Officer Ken Leech "is on a leave of absence, effective immediately" after "receiv[ing] a Wells Notice from the Staff of the U.S. Securities and Exchange Commission". That same day, Bloomberg reported that "[f]ederal prosecutors in New York are investigating whether a Western Asset Management executive allocated winning trades to favored accounts, as part of a criminal probe into a practice known as ‘cherry-picking.'"

On this news, Franklin's stock price fell $2.84 per share, or 12.56%, to close at $19.78 per share on August 21, 2024.

What's Next?

If you are aware of any facts relating to this investigation or purchased Franklin securities, you can assist this investigation by visiting the firm's site: bgandg.com/BEN . You can also contact Peretz Bronstein or his client relations manager, Nathan Miller, of Bronstein, Gewirtz & Grossman, LLC: 332-239-2660.

There is No Cost to You

We represent investors in class actions on a contingency fee basis. That means we will ask the court to reimburse us for out-of-pocket expenses and attorneys' fees, usually a percentage of the total recovery, only if we are successful.

Why Bronstein, Gewirtz & Grossman

Bronstein, Gewirtz & Grossman, LLC is a nationally recognized firm that represents investors in securities fraud class actions and shareholder derivative suits. Our firm has recovered hundreds of millions of dollars for investors nationwide.

Attorney advertising. Prior results do not guarantee similar outcomes.

CONTACT:
Bronstein, Gewirtz & Grossman, LLC
Peretz Bronstein or Nathan Miller,
332-239-2660 | info@bgandg.com

SOURCE: Bronstein, Gewirtz and Grossman, LLC

View the original press release on accesswire.com

FAQ

What is the investigation against Franklin Resources (BEN) about?

The investigation by Bronstein, Gewirtz & Grossman, concerns potential claims against Franklin Resources (BEN) following news of a Wells Notice issued to a top executive and a federal probe into possible 'cherry-picking' of trades at its subsidiary, Western Asset Management Company.

How did Franklin Resources' (BEN) stock price react to the news on August 21, 2024?

Franklin Resources' (BEN) stock price fell $2.84 per share, or 12.56%, closing at $19.78 per share on August 21, 2024, following the announcement of the Wells Notice and federal investigation.

What is a Wells Notice in relation to Franklin Resources (BEN)?

A Wells Notice is a notification from the SEC indicating that they are planning to bring an enforcement action against an individual or company. In this case, Ken Leech, co-Chief Investment Officer of Franklin Resources' (BEN) subsidiary Western Asset Management, received a Wells Notice.

What is 'cherry-picking' in the context of the Franklin Resources (BEN) investigation?

'Cherry-picking' refers to the practice of allocating winning trades to favored accounts. Federal prosecutors are investigating whether a Western Asset Management executive, a subsidiary of Franklin Resources (BEN), engaged in this practice.