(Bloomberg) -- Western Asset Management Co. has been selling commercial mortgage backed securities recently as investors pull cash out of its bond funds, according to people familiar with the matter.
Investors began pulling funds rapidly from the California-based asset manager after it disclosed last month the departure of Chief Investment Officer Ken Leech amid Justice Department and Securities and Exchange Commission probes into its trading practices.
Since then, assets in the firm's flagship core plus bond fund have fallen to less than $13 billion, nearly half what it held at the start of the year, according to data compiled by Bloomberg.
The sales were flagged in lists of securities circulated for auction among investors, known as bid lists. While the lists don't say who the seller is, market participants said that Western Asset is the seller, according to those with direct knowledge of the matter, who declined to be identified while discussing private information.
A spokesperson for Western Asset Management Company declined to comment.
Among the securities listed for sale was a $9.77 million AAA rated bond backed backed by an office campus in Santa Clara, according to one of the securities listings shared with Bloomberg. That matches the amount that the firm's core bond fund has reported owning, according to data compiled by Bloomberg.
As much as 44% of Western Asset's core plus bond fund is invested in mortgage bonds, compared with 36% exposure to corporate securities and 6.6% to government securities, according to Bloomberg data as of Friday afternoon.
Asset Backed Alert reported Friday morning that Western Asset has been selling CMBS and other securities to meet investor redemptions.
