It reported a net loss of $325.1 million, or $2.29 per share, for its fiscal fourth quarter to March 31, compared with a loss of $255.5 million, or $1.81 per share, in the year-earlier quarter.
Analysts surveyed by Reuters Estimates were expecting the Baltimore company to lose $2.33 per share. Revenues fell 42 percent to $617.2 million, against the average analysts' forecast of $611.5 million.
The company's shares fell $4.08 to $18.45 on the New York Stock Exchange.
In early March, Legg Mason sold $1.8 billion worth of structured investment vehicles from its money market funds. It said on Tuesday the sale resulted in losses totaling $367.4 million after taxes and operating expenses, or $2.59 per share.
One of the largest publicly traded U.S. money managers and home to once-vaunted stock picker Bill Miller, Legg Mason sold the assets for 25 cents on the dollar.
The company said assets under management stood at $632.4 billion as of March 31, down 9 percent from $698.2 billion at December 31, mainly due to net outflows of $43.5 billion. Like other asset-managers, Legg Mason had seen sharp outflows as markets declined and on concerns over the money market funds.
However, the outflows were lower than the total outflows of $77 billion Legg reported in its December quarter.
Jefferies & Co. analyst Dan Fannon said Monday he expected outflows of around $40 billion for the fourth fiscal quarter, a rough consensus, because of improved stock markets and seasonal habits of investors. The flows number the company reports will likely have a impact on the stock price, he added.
Legg Mason shares closed at $22.53 on Monday, nearly a third of their value a year ago when they closed at $64.26 on May 5, 2008. However, shares have recovered from a low of $10.37 on March 9 after the structured investment vehicle sales.
(Additional reporting by Christopher Kaufman; editing by Dave Zimmerman and Derek Caney)