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Legg Mason sets aside $67 million to resolve Libya investigation

Legg Mason expects to pay $67 million to settle a U.S. probe of one of its affiliates that managed investments for the Libyan government during the rule of Muammar el-Qaddafi.

The Baltimore-based money management firm is negotiating with the U.S. Department of Justice and the Securities and Exchange Commission to resolve an investigation under the Foreign Corrupt Practices Act, the company said in a filing this week with the SEC.

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Enacted in 1997, the law prohibits bribes of foreign officials to obtain business.

Federal investigators looked into Legg’s former Permal Group, which managed investments of LIbyan “governmental entities” from 2005 to 2007 in structures set up by a third-party financial institutions. All investments were terminated no later than 2012, the report said.

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“The matter does not relate to any of our or our affiliates’ current business activities or client relationships and has focused on the actions of former employees of Permal who left that firm four or more years ago,” the company said in the SEC filing.

Legg Mason announced Monday it had completed a merger between Permal, its hedge fund platform, with New York City-based EnTrust Capital, another hedge fund and alternative investment firm that has about $12 billion in assets under management.

Mary Athridge, a Legg Mason spokeswoman, said she could not comment on the matter.

Qaddafi’s government fell in the Arab Spring of 2011, and he was killed later that year.

The settlement is not expected to lead to any restrictions on the company’s or its affiliates’ business activities, Legg said in the SEC filing.

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The firm took a $67 million charge to earnings in the year that ended March 31, partly reflecting net revenues of about $31 million that Permal earned managing the Libyan assets.

The settlement is subject to final review and approval of the Justice Department, the SEC commissioners and the company’s board and may be higher, Legg said.

Legg acquired Permal in 2005. In May 2016, it merged the hedge fund platform with New York-city based Enrust Capital, investing about $400 million in the hedge fund manager to create EnTrust Permal.

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