Franklin Resources Reports Fourth-Quarter Loss

(Reuters) – Investment manager Franklin Resources (NYSE:BEN), also known as Franklin Templeton, posted a fourth-quarter loss on Monday as a $389.2 million impairment charge linked to its Western Asset Management unit overshadowed increased management fees.

Why It’s Important

The Western Asset Management unit primarily handles fixed income portfolios and is under investigation by the U.S. Securities and Exchange Commission (SEC) regarding certain trade allocations involving treasury derivatives.

In August, Western Asset stated that its co-chief investment officer, Ken Leech, received a Wells Notice from the SEC and is currently on a leave of absence. A Wells Notice is issued when the SEC intends to pursue enforcement action but does not automatically indicate that wrongdoing has occurred.

By The Numbers

Franklin Templeton indicated that the $389.2 million impairment charge was associated with specific mutual fund contracts managed by Western Asset. Despite this, the company's total investment management fees rose 8% to $1.77 billion in the fourth quarter compared to the previous year.

For the three months ending September 30, the company reported a loss of $84.7 million, or 19 cents per share, in contrast to a profit of $295.5 million, or 58 cents, a year prior. Excluding one-time charges, Franklin Templeton's quarterly profit decreased 3% to $315.2 million.