SEC Division of Corporation Finance no-action letter: Franklin Resources, Inc.

June 5, 2026
Daniel Michael
Skadden, Arps, Slate, Meagher & Flom LLP
One Manhattan West
New York, NY 10001
Re: Franklin Resources, Inc. - Waiver Request of Ineligible Issuer Status under Rule 405 of the Securities Act of 1933 Dear Daniel Michael:
This is in response to your letter dated June 4, 2026 to Jay Mumford (“Waiver Letter”), written on behalf of Franklin Resources, Inc. (“Franklin”), related to the Commission’s June 5, 2026 order against Western Asset Management Company, LLC (“Western Asset”), a subsidiary of Franklin, pursuant to Sections 203(e) and 203(k) of the Investment Advisers Act of 1940 (the “Order”). Entry of the Order will render Franklin an “ineligible issuer” under clause (1)(vi) of the ineligible issuer definition in Rule 405 of the Securities Act of 1933. Franklin requests relief from that designation. Based on the facts and representations in the Waiver Letter, we have determined that Franklin has made a showing of good cause under clause (2) of the definition of ineligible issuer in Rule 405 that it is not necessary under the circumstances that it be considered an ineligible issuer. Any different facts from those represented or Western Asset’s failure to comply with the terms of the Order would require us to revisit our determination and the Commission reserves the right, in its sole discretion, to revoke or further condition this waiver under those circumstances. For the Commission, by the Division of Corporation Finance, pursuant to delegated authority. Sincerely, /s/ M. Hughes Bates M. Hughes Bates Chief, Office of Enforcement Liaison Division of Corporation Finance

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Attn: Jay Mumford
Office of Enforcement Liaison
Division of Corporation Finance
100 F Street, NE
Washington, D.C. 20549
RE: In the Matter of Certain Western Asset Management Company Investment Allocations Dear Office of Enforcement Liaison:
We write on behalf of Franklin Resources, Inc. (“Franklin”) in connection with the settlement by its subsidiary, Western Asset Management Company, LLC (“Western Asset”), with the United States Securities and Exchange Commission (“SEC” or “Commission”) relating to In the Matter of Certain Western Asset Management Company Investment Allocations. Western Asset’s settlement resulted in an Order Instituting Administrative and Cease-and-Desist Proceedings Pursuant to Sections 203(e) and 203(k) of the Investment Advisers Act of 1940 (the “Advisers Act”), Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order (the “Order”) against Western Asset. Franklin is a reporting company with a class of securities registered under Section 12 of the Securities Exchange Act of 1934 (the “Exchange Act”), and its common stock is listed on the New York Stock Exchange under the ticker symbol “BEN.” Franklin currently qualifies as a

“well-known seasoned issuer” (“WKSI”), as defined in Rule 405 under the Securities Act of 1933 (the “Securities Act”). Franklin is seeking to maintain its WKSI status and hereby respectfully requests a waiver from the Division of Corporation Finance (the “Division”), acting pursuant to delegated authority, or an order granting such a waiver from the Commission itself, determining that it is not necessary under the circumstances to deem Franklin to be an “ineligible issuer,” as defined in Rule 405, as a result of the Commission entering the Order. Consistent with the framework outlined in the Division’s Revised Statement on Well-Known Seasoned Issuer Waivers (April 24, 2014) (“Revised Statement”), we believe there is good cause for the Division, on behalf of the Commission, or the Commission itself, to grant the requested waiver.
I. BACKGROUND
Western Asset is a registered investment adviser. The Order stems from the actions of Western Asset’s former co-chief investment officer (“CIO”), Stephen Kenneth Leech II (“Leech”). On November 25, 2024, the Commission and Department of Justice (“DOJ”) separately charged Leech with engaging in a “cherry-picking” scheme from January 2021 through October 2023, by disproportionately allocating trades with net realized and unrealized first-day gains to certain portfolios (the “Favored Portfolios”) and trades with net realized and unrealized first-day losses to other portfolios (the “Disfavored Portfolios”). The Order finds that Western Asset failed to take reasonable steps to detect and prevent this conduct by its former co-CIO. The Order states that Western Asset was aware that Leech’s trading and allocation practices diverged from those of some other portfolio managers at the firm who created instructions to allocate trades to specific portfolios at or near in time to trade placement. Instead, following confirmations from brokers, Leech’s trades were routinely entered near or after the derivatives market set daily settlement prices. This practice gave Leech the opportunity to see whether the market value of his trades went up or down after trade execution. The Order finds that Western Asset failed to take reasonable steps to ensure that Leech’s actions were consistent with the firm’s disclosures to clients, including that its investment allocations would be done in a manner that was fair and equitable. The Order further finds that Western Asset failed to implement policies and procedures reasonably designed to prevent violations of the Advisers Act and its rules, including failing to implement its policies requiring that no client be intentionally favored over another. Additionally, the Order finds that Western Asset failed reasonably to supervise Leech. The Order finds that Western Asset violated Sections 206(2) and 206(4) of the Advisers Act and Rule 206(4)-7 thereunder, and failed reasonably to supervise Leech, within the meaning of
Section 203(e)(6) of the Advisers Act. Without admitting the findings set forth in the Order,
except as to the jurisdiction of the Commission, Western Asset consented to the entry of the Order, and to cease and desist from committing or causing any violations and any future violations of Sections 206(2) and 206(4) of the Advisers Act and Rule 206(4)-7 promulgated thereunder, be censured, and to pay a civil money penalty of $100 million.

II. DISCUSSION
Franklin understands that the entry of the Order against Western Asset renders Franklin an ineligible issuer under Rule 405. As a result, absent a waiver determining that it is not necessary under the circumstances to deem Franklin to be an ineligible issuer, Franklin would no longer be able to avail itself of the benefits of WKSI status. Consistent with the framework outlined in the Revised Statement, based on the facts and circumstances discussed below, Franklin respectfully submits that there is good cause for the Division or the Commission to determine that it is not necessary under the circumstances for Franklin to be deemed an ineligible issuer as a result of the Order and grant the requested waiver. A. Nature of the Violations and Whether the Violations Cast Doubt on the Ability of the Issuer to Produce Reliable Disclosures Franklin is not being charged by the Commission. The violations and the underlying conduct described in the Order relate to the Advisers Act and are unrelated to actions undertaken by Frankin or by Western Asset in connection with Franklin’s role as an issuer of securities (or any disclosure related thereto) or any of Franklin’s filings with the Commission under the Securities Act and the Exchange Act. In addition, the conduct described in the Order did not involve any material misstatements or omissions of fact in any of Franklin’s public disclosures. The Order did not find any weaknesses or violations associated with the disclosures and other internal controls maintained by Franklin in connection with its preparation and review of its financial statements and Commission filings under the Securities Act and the Exchange Act. Accordingly, the conduct described in the Order does not call into question the reliability of Franklin’s current or future public disclosures as an issuer of securities and did not involve Franklin’s financial statements or any of its other disclosures. B. The Order Does Not Involve Scienter-Based Fraud, and Western Asset Is Not Being Charged Criminally Both the SEC complaint and SDNY indictment against Leech allege that he is the sole perpetrator of the charged cherry-picking scheme, and the SEC complaint alleges that he carried out this scheme by evading detection.1 As to the SEC’s contemplated claims against Western Asset, the Order’s findings do not include any findings of intentional or reckless violations of the Advisers Act or any other federal securities law. The Order finds that Western Asset, and not Franklin, violated Section 206(2) of the Advisers Act due to negligent conduct. It further finds that Western Asset violated Rule 206(4)-7 and failed to supervise Leech within the meaning of Advisers Act Section 203(e)(6), neither of which requires fraud or scienter. Neither Franklin nor Western Asset has been the named party in a criminal matter involving disclosure for which Franklin or any of its subsidiaries was responsible, nor has either been named as a party in any criminal matter
relating to the parallel actions against Leech. As 1 See Complaint ¶¶ 117-36, 153-59, SEC v. Leech, No. 24 Civ. 09017 (S.D.N.Y. Nov. 25, 2024); Indictment ¶¶ 13, 17-20, U.S. v. Leech, No. 24 Cr. 658, ECF No. 1 (S.D.N.Y. Nov. 25, 2024).

Franklin previously disclosed, the DOJ conveyed that it is prepared to resolve its investigation into Western Asset through a disposition that does not require the filing of any criminal charges against Western Asset in connection with the conduct charged in United States v. Leech. 2
C. The Persons Responsible for the Misconduct
The conduct described in the Order involves Leech and Western Asset, neither of which were or are responsible for, and did not have and do not have any influence over, the preparation of Franklin’s financial statements or Commission filings under the Securities Act and the Exchange Act. No employees of Franklin responsible for preparing Franklin’s financial statements and filings with the Commission or members of Franklin’s Board of Directors knew of or were involved in the conduct described in the Order, nor did the Board or employees of Franklin ignore any red flags with respect to such conduct. Moreover, no Franklin employees or members of its Board will be named as respondents or charged with any violations of the securities laws in connection with the conduct described in the Order. D. Duration of the Misconduct The Order finds Western Asset failed to take sufficient steps to detect and prevent a scheme that occurred between January 2021 and October 2023. E. Remedial Steps Taken Western Asset has taken decisive and extensive remedial steps. In October 2023, immediately after concerns about a pattern involving Leech’s allocations were escalated to Western Asset’s co-CIO, General Counsel, and CEO, Western Asset (i) directed another portfolio manager to allocate Leech’s trades for the Disfavored Portfolios and then restricted Leech’s trading altogether in those portfolios, (ii) closely monitored Leech’s trading activity in the Favored Portfolios, including with a daily review of executed trades and their allocations by a member of senior management, and (iii) hired outside counsel to commence an investigation into Leech’s trade allocations. Western Asset has also implemented the following remedial measures:

• It accelerated a previously planned transition so that, beginning in Q4 2023, reporting
  lines for all global investment professionals switched from Leech to his co-CIO (except for certain personnel dedicated to the investment strategy of the Favored Portfolios), and leadership of a different team (the Broad Market team) likewise transitioned away from Leech.
• Following Leech’s receipt of a Wells notice in August 2024, Western Asset
  immediately placed Leech on administrative leave and took steps to wind down the 2 Franklin Resources, Inc., Form 8-K, December 13, 2025.

investment strategy of the Favored Portfolios, which it completed in October 2024. Leech retired around August 2025 and has no role in Western Asset’s current trading or operations.

• As of September 2024, Western Asset’s compliance function now performs a daily
  fair-allocation analysis across different strategies to check for price movement between the time of execution and the end of the day, with a monthly focus on identifying trends in allocations at both the portfolio level and the strategy level that could indicate bias.

• As of November 2024, Western Asset now requires that allocations take place before
  or concurrent with execution, and traders document their intended allocations in the company’s trading system at the time of order entry. The purpose of this control is to foreclose an opportunity to make allocation decisions based on intraday market movements by requiring that investment professionals create a record of original allocation intent before or at the time they place a trade.

• At the same time, Western Asset also revised its allocation policies and procedures so
  that they (i) require that allocations be completed and documented by 3 p.m. PT (as opposed to by the end of the day)3 ; and (ii) now describe factors that may lead to non￾pro rata allocations (e.g., differences in guidelines, cash flows, inclusion of new accounts ramping up, inflows of capital, and loan or interest payments). Additionally, allocation of partial fills where certain accounts are removed or receive a lower, non￾pro rata allocation now requires signoff of at least two portfolio managers or the Director of Portfolio Operations.

• Around the same time, Western Asset’s compliance function also developed a new
  monthly report with respect to delayed trade entries, which identifies trades for which the trade date precedes the execution timestamp by more than one day.4 This report is reviewed at the end of each month by Western Asset’s Director of Portfolio Operations. As of November 2025, Western Asset formalized a monthly meeting between compliance and the Director of Portfolio Operations to review and discuss the delayed trades report. 3 Because a trade can only be completed and documented after a broker has executed it, which may be well after order placement, a requirement that investment professionals complete trades at or around order placement is not practicable. Western Asset selected this 3 p.m. PT cutoff based on this fact, as well as the fact that broker confirmations of executed trades tend to be sent throughout the trading day. Western Asset does not believe that this cutoff presents an opportunity for allocating based on market movements because, as stated in the above bullet, allocation decisions must be documented by the time an order is placed. 4 This report is generated on a monthly basis, rather than on a daily or more frequent basis, to allow for a sufficient period of time to identify any notable patterns, and to account for the fact that brokers can, and often do, send trade confirmations at all hours of the day, including overnight. In addition, Western Asset has implemented the daily fair-allocation analysis summarized above to monitor allocations during the month.

• In November 2024, Western Asset’s Global CCO trained all employees with
  allocation-related duties on its new allocation policy and on best practices.

• In 2025, all corporate, operational, and compliance functions supporting the Western
  Asset investment team were integrated into Franklin to allow for increased oversight and supervision. Western Asset also aligned with Franklin’s policies, including its Code of Ethics and Global Trade Allocation Policy.

• Western Asset appointed new executives in the CEO, CIO, Deputy CIO, and Chief
  Compliance Officer roles. In January 2026, Western Asset’s CIO began reporting indirectly to Franklin’s Head of Public Market Investments and to the CIO of Franklin Templeton Fixed Income. F. Impact on Issuer if the Request is Denied The Revised Statement indicates that the Division will “assess whether the loss of WKSI status would be a disproportionate hardship in light of the nature of the issuer’s conduct.” Franklin respectfully submits that being deemed an ineligible issuer, and the related loss of WKSI status, would create such a hardship in light of the lack of conduct by Franklin and the lack of connection between the conduct described in the Order and Franklin’s financial statements, filings with the Commission under the Securities Act and the Exchange Act, and Franklin’s other public disclosures. Franklin currently relies on and, if the requested waiver is granted, expects to rely in the future, on automatic shelf registration statements to conduct offers and sales of securities, with the automatic shelf registration process providing an important means of timely and efficient access to the capital markets to provide funding for its business activities. During the past approximately five years, Franklin completed multiple public offerings of its debt securities, in each case offering and selling securities that had been registered on Form S￾3ASR registration statements. In about October 2020, Franklin offered $750 million in debt securities. In August 2021, Franklin offered $350 million, as well as $100 million, in debt securities, both with varying interest rates. Franklin filed its most recent Form S-3ASR in February 2025, and it is still in effect. The proceeds from these offerings were used for a variety of purposes. Franklin expects that the proceeds of future offerings also would be used for a variety of purposes, including funding operations and growth, paying stockholder dividends, investing in Franklin’s products, paying income taxes and business expenses, enhancing technology infrastructure and business processes, repurchasing shares of common stock, repaying and servicing debt, and financing future acquisitions. The ability to avail itself of the benefits of WKSI status has been important in the past and will continue to be important to Franklin in the future. Franklin participates in a rapidly evolving industry, and like its competitors, faces changing regulatory and market conditions and uncertainties. Strategic transactions and favorable financing opportunities can present themselves with little notice. Franklin respectfully submits that disqualification from being eligible for WKSI status would have an adverse impact on the company. Further, the conduct described in the Order does

not relate to the issuance of Franklin’s securities, and, therefore, Franklin believes it would be inequitable to its shareholders to lose its WKSI status. G. Prior Relief Franklin previously requested and received a waiver regarding ineligible issuer status in July of 2020. This waiver was granted in connection with a resolution the Commission reached with Franklin’s direct subsidiary, Franklin Advisors, Inc. (“FAV”), and indirect subsidiary, Franklin Templeton Investments Corp. (“FTIC”) for conduct that occurred between December 2014 and September 2016. The Commission’s 2020 order primarily found that FAV caused certain U.S.-registered investment companies (“Funds”) it advised to purchase an amount of shares in three ETFs in excess of the firm-wide ownership limitation contained in Section 12(d)(1)(F) of the Investment Company Act of 1940 (“Investment Company Act”) for each of the ETFs and further found compliance-related failures, as well as failures to make appropriate disclosures to the Funds’ Boards.5 With respect to FTIC, the order found that it caused certain investment companies that it advised to violate Section 12(d)(1)(A)(i) of the Investment Company Act, which prohibits investment companies from acquiring more than 3% of the outstanding voting stock of another registered investment company. 6 The conduct that gave rise to the July 2020 WKSI waiver involved different subsidiaries, was unrelated to Franklin’s public disclosures, and is dissimilar to the conduct that gave rise to the instant waiver request. The unrelated conduct of other subsidiaries about a decade ago should not call into question the adequacy of Franklin’s internal control over financial reporting or its ability to produce reliable disclosures.
III. CONCLUSION
Franklin respectfully submits that subjecting it to ineligible issuer status is not necessary under the circumstances, either in the public interest or for the protection of investors, and good cause exists for the grant of the waiver requested. Accordingly, Franklin respectfully requests that the Division, acting pursuant to its delegated authority, or the Commission itself, determine that it is not necessary under the circumstances to deem Franklin, and any of its current and future affiliates, to be an “ineligible issuer,” as defined in Rule 405, as a result of the Commission entering the Order. Please contact me at (212) 735-2200 if you have any questions or would like to discuss Franklin’s request. 5 In re Franklin Advisors, Inc. and Franklin Templeton Inv. Corp., Admin. Proc. No. 3-19854 (July 2, 2020). 6 Id.

Sincerely,
/s/ Daniel Michael
Daniel Michael