On January 27, 2014, the SEC instituted settled administrative and cease-and-desist proceedings against Western Asset Management Company. According to the SEC: "From 2007 through 2010, Western, a registered investment adviser to various clients, including registered investment companies ('RICs'), arranged dealer-interposed cross trade transactions in which counterparty dealers purchased fixed-income securities from certain Western advisory client accounts, and then resold the same securities to certain other Western advisory client accounts. Because many of these cross trades were effected between two RIC client accounts or between RIC and RIC-affiliated client accounts, Western aided and abetted and caused certain of its advisory clients unwittingly to violate Sections 17(a)(1) and (2) of the Investment Company Act. In addition, the manner in which Western effectuated the cross trades resulted in undisclosed favorable treatment of certain of its advisory clients over others, and, as a result, Western violated Section 206(2) of the Advisers Act."

On January 27, 2014, the SEC announced "sanctions against a California-based investment adviser for concealing investor losses that resulted from a coding error and engaging in cross trading that favored some clients over others." The SEC's announcement encompasses two separate administrative proceedings against Western Asset Management Company (File Numbers: 3-15688 and 3-15689).