Franklin Templeton CEO emphasizes client well-being amid SEC investigation.

• In the aftermath of an SEC investigation and the company's worst financial quarter, negative comments have emerged.
• In the past three months, Western Asset Management, Franklin Templeton's biggest affiliate, experienced $37 billion in redemptions.

Johnson, CEO of Franklin Templeton, stated that the company's top priority is to act ethically and put its clients' interests first, following the company's worst quarter for financial outflows and an SEC investigation into its fixed-income unit's suspicious trading.

The investment firm, headquartered in California and managing $1.7 trillion in international assets, has experienced a significant financial impact since August when Ken Leech, co-head investment officer of Western Asset Management, was placed on leave of absence due to an SEC investigation into derivatives trades for high net-worth clients.

In the last three months, the troubled unit experienced a staggering $37 billion in outflows, with nearly $24 billion taken out in the following month, according to Financial Times reporting.

Franklin Templeton's fixed-income business has struggled with underperformance for years, despite investors anticipating a turnaround as funds shift towards bonds and other fixed-income investments, which account for approximately 30% of the firm's assets.

Western Asset Management's issue was damaging, but Johnson emphasized that it was an isolated case and supporting clients is Franklin Templeton's top priority.

Johnson informed CNBC's Dan Murphy in Riyadh that there has been an issue at Western, which is limited to an individual and specific strategies, but there have been outflows in those strategies.

"Although Western has other strategies and global clients, we have been negatively impacted by problems with those three specific strategies."

The CEO highlighted that Franklin Templeton was collaborating with the government on the investigation to restore investor confidence.

"The key is to ensure that clients' investment teams are not impacted by this. This is what clients want to know. We have ensured that they have the resources and are being supported and focused on their daily tasks. This is an area of focus."

"Johnson stated that Western accounts for approximately 10% of our revenues and offers a diverse range of fixed-income strategies that differ from those that have been scrutinized."

Johnson advised investors to take comfort in the fact that the strategies outside of the investigation are focused and that the person being investigated is on a leave of absence and has not been involved in portfolio management for a while. As a result, the team is ensuring that everyone is focused on managing the money in the same way.

"Western has been a manager for a long time, navigating through various market cycles, and has global clients who remain loyal. They continue to focus on their daily tasks."

Johnson expressed confidence about the ability to bring money back to the firm. "We have a lot of different brands under Franklin Templeton and outside of Western, we're actually in positive flows through the rest of our business," she said.

"Johnson emphasized that as a CEO, he faces challenges and must maintain a long-term perspective while prioritizing the interests of his clients. He shared his father's advice to always put the client first, stating that doing so would ensure the success of the business. Consequently, Johnson and his team are fully committed to ensuring that their clients' needs are met."