(Bloomberg) -- The Chicago Teachers’ Pension Fund is preparing to liquidate its investment in one of Western Asset Management Co.’s flagship bond funds, in an early sign of the potential fallout from federal investigations into the firm.

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The pension’s investment committee voted Tuesday to recommend terminating Wamco’s Core Plus fixed-income mandate, Fernando Vinzons, Chicago Teachers’ chief investment officer, said in an emailed statement. Wamco managed $550 million for the pension fund at the end of June.

The move adds to pressure on Wamco since its longtime CIO, bond trader Ken Leech, took an immediate leave of absence amid the probes. The asset manager said it’s cooperating with the US Department of Justice as well as the Securities and Exchange Commission, and that the regulator’s staff had already sent a Wells notice, warning they may recommend enforcement action.

The next meeting of Chicago Teachers’ board of trustees is scheduled for Sept. 19, the earliest date for it to take action, according to its statement.

A spokesperson for Pasadena, California-based Wamco, a unit of Franklin Resources Inc., declined to comment. Shares of Franklin have declined 10% since Wamco disclosed the SEC’s warning last week.

The US inquiries are focused on whether some clients were favored over others through cherry-picking of profitable trades, people with knowledge of the matter said last week.

The firm, which is also conducting its own investigation, is looking into 38 accounts across three strategies, a person with knowledge of the situation said at the time. That review hasn’t found evidence that Leech had personal or professional motivations to favor one strategy over another, the person added.

(Updates with description of inquiries and stock performance from fifth paragraph.)

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