These Are the Juiciest Nuggets From Bill Gross’ Lawsuit Against Pimco
“Their improper, dishonest and unethical behavior must now be exposed”, the veteran financial manager said in the suit, in which he is seeking at least $200 million in damages.
The lawsuit says Ivascyn found an ally in Brent Harris, and the two went on to recruit other executives who stood to gain from upheaval.
Through Wednesday, his $1.4 billion Janus fund has returned negative 1.61 percent this year, lagging almost three-quarters of its peers and trailing the Barclays U.S. Aggregate Bond Index by 2.94 percentage points, according to Morningstar Inc.
Gross “could not agree to participate in this deceit”, the complaint said.
The lawsuit refers to PIMCO’s fees and disclosures, “with Bill Gross suggesting that PIMCO has been deliberately obfuscating the allocation of a few fees in order to make it easier for the firm to raise them”, Jacobson explains.
The lawsuit focuses on the conflict between Gross, Mohammed El-Erian – once considered Gross’ successor at Pimco – and other executives at the firm.
At the time, Pimco chief executive Douglas Hodge thanked Gross for his service, but said “over the course of this year it became increasingly clear that the firm’s leadership and Bill have fundamental differences about how to take Pimco forward”. “Mr. Gross’s ongoing success at Pimco proved to be his undoing”, states the complaint, filed by Patricia Glaser with Glaser Weil Fink Howard Avchen & Shapiro.
Michael Diekmann, CEO of Allianz intervened to resolve the dispute. The complaint highlighted, “This plan stripped Mr. Gross of power position and compensation”. Gross portrays himself as the victim of a retaliatory campaign by “younger executives” after he pushed for lower fees and opposed moves toward what he believed were riskier investments.
Gross, a billionaire, had been “on track” to receive a bonus topping $250 million from Pimco in 2014, with most of it paid late in the year, according to the complaint.
Ironically, PIMCO declined to do so in this case, but did refuse to pay Gross his bonus when he left six months later.
Now, he has filed a complaint against his former company. When Pimco was founded, it had $12 million in assets; by 2013, the Total Return Fund was the world’s largest mutual fund, with $300 billion in assets. It’s about his reputation and how history will portray the end of one of the greatest careers in money management.
“No matter how much wealth you’ve amassed, no one wants to feel that they were treated shabbily and unjustly”, said Mark Elzweig, head of Mark Elzweig Co., an executive-search consultancy that has worked with advisors and asset managers. Today, you can download 7 Best Stocks for the Next 30 Days.