• The comments come amid damaging reports about the firm in the wake of an SEC probe and the worst quarter for financial outflows in its history.
• Franklin Templeton's largest subsidiary, Western Asset Management, saw $37 billion in outflows in the last three months.

RIYADH — Franklin Templeton CEO Jenny Johnson said the firm is focused on doing right by its clients, in her first public comments after the company saw its worst quarter for financial outflows in its history and the Securities and Exchange Commission started a probe into suspicious trading at its fixed-income unit.

The California-headquartered investment firm, which manages $1.7 trillion in assets internationally, has taken a dramatic financial hit since announcing in August that Ken Leech, co-head investment officer of its largest subsidiary Western Asset Management, has been put on a leave of absence amid a SEC investigation about derivatives trades for high net-worth clients.

The following month saw a whopping nearly $24 billion in outflows from the troubled unit, with a total of $37 billion taken out of the subsidiary in the last three months, according to reporting from the Financial Times.

Franklin Templeton's fixed-income business has also dealt with years of underperformance, which many investors expected to reverse course as money moves into bonds and other fixed-income products, which make up about 30% of the firm's assets.

Johnson told CNBC Wednesday that the issue with Western Asset Management was damaging, but stressed that it stemmed from an isolated case, and that supporting clients was Franklin Templeton's top focus.

"We've had an issue at Western which is isolated to an individual and a subset of strategies, but there's definitely been outflows in those strategies," Johnson told CNBC's Dan Murphy in Riyadh.

"I mean, the good news — Western has a significant amount of other strategies that are outside of this and have a lot of global clients there, but we've definitely been hurt by the issues on those three strategies."

On how the firm was working on restoring investor confidence, the CEO emphasized that Franklin Templeton was cooperating with the government on the investigation in question.

"And then the key is, and what clients want to know is, are their investment teams who are looking at it impacted by this," she said. "And so we've been sure that they have the resources and that they're continuing to manage and be supported and focused on what they're doing every day. And so that's an area of focus."

"Western represents about 10% of our revenues," Johnson added. "And they have a myriad of different fixed-income strategies that are outside of the ones that have been under issue."

As for what the latest developments mean for current investors, Johnson said that "clients should take comfort that the strategies outside of that are all very much focused. And actually, even the current strategies, you know, the person that is being investigated is on a leave of absence, and so has not been involved in portfolio management for a while, and so we are making sure that everybody is very much focused on managing the money the way that they do."

"Western has a long, long career as a manager through a lot of different market cycles," she said. "And as I said, they have global clients, very loyal global clients, and so they're continuing to stay focused on what they need to do every day."

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.

"As a CEO, there are always times that you run into difficulties, and you have to stay focused on the longer-term picture, and on doing what's right for your clients," Johnson added. "My father always said, do what's right by the client, and the business will take care of itself. So we're 100% focused on making sure that we do right by our clients."