Franklin Templeton CEO says focus is on 'doing what's right' for clients amid SEC probe

RIYADH — Franklin Templeton CEO Jenny Johnson said the firm is focused on doing right by its clients, in her first public comments after the company saw its worst quarter for financial outflows in its history and the Securities and Exchange Commission started a probe into suspicious trading at its fixed-income unit.

The California-headquartered investment firm, which manages $1.7 trillion in assets internationally, has taken a dramatic financial hit since announcing in August that Ken Leech, co-head investment officer of its largest subsidiary Western Asset Management, has been put on a leave of absence amid a SEC investigation about derivatives trades for high net-worth clients.

The following month saw a whopping nearly $24 billion in outflows from the troubled unit, with a total of $37 billion taken out of the subsidiary in the last three months, according to reporting from the Financial Times.

Franklin Templeton's fixed-income business has also dealt with years of underperformance, which many investors expected to reverse course as money moves into bonds and other fixed-income products, which make up about 30% of the firm's assets.

Johnson told CNBC Wednesday that the issue with Western Asset Management was damaging, but stressed that it stemmed from an isolated case, and that supporting clients was Franklin Templeton's top focus.

"We've had an issue at Western which is isolated to an individual and a subset of strategies, but there's definitely been outflows in those strategies," Johnson told CNBC's Dan Murphy in Riyadh.

"I mean, the good news — Western has a significant amount of other strategies that are outside of this and have a lot of global clients there, but we've definitely been hurt by the issues on those three