Aug 1 (Reuters) - Investment manager Franklin Resources ( BEN )

, better known as Franklin Templeton, reported a fall in

third-quarter profit on Friday, as client outflow cut into its

investment management fees, sending its shares down 6% in early

trading.

Investors have been pulling out funds from Franklin

subsidiary Western Asset Management after a federal

investigation charged Kenneth Leech, the unit's former co-chief

investment officer, with running a "cherry-picking" scheme.

Leech was charged with fraudulently favoring some clients'

accounts over others when allocating trades.

The asset manager's total long-term net outflows were $9.3

billion during the third quarter. Excluding Western Asset

Management, its long-term net inflows were $7.8 billion.

Franklin's total investment management fees, the largest

contributor to its total operating revenue, fell 3% to $1.64

billion during the quarter.

U.S. President Donald Trump's erratic trade policies have

unsettled the market, leaving investors waiting for greater

clarity regarding the economic environment.

As a result, investors have increasingly shifted toward

safer assets such as U.S. Treasury bonds and gold, pulling back

from equities, which are a riskier bet to make at a time when

the markets are volatile.

Franklin Templeton ended the quarter with $1.61 trillion in

assets under management, down 2% from a year ago.

Excluding one-time costs, Franklin's quarterly profit was

$263.4 million, or 49 cents per share, compared with an average

of $326.4 million, or 60 cents, a year ago.