By mid-September 2014, when conditions had become untenable, Gross said he began negotiating to resign as chief investment officer, cut his bonus, give up oversight of Total Return, and as “further humiliation” be barred from Pimco’s offices in Newport Beach, California. (El-Erian is a Bloomberg View contributor.) The complaint discusses how Balls was caught – “After a week spent checking the phone records of PIMCO land lines and cell phones turned up nothing, PIMCO’s investigators then checked the records for a second, little-used cell phone issued to Balls” – and complains that Gross wanted him fired but was overruled by other conspirators. In Gross’s world, however, El-Erian resigned because Gross offered not to work with El-Erian. But does this legal and public relations strategy – which comes about 15 months after Gross famously donned a pair of sunglasses during his presentation at the annual Morningstar Investment Conference – make sense?
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Gross now oversees just $1.4 billion at the Janus Global Unconstrained Bond fund.
Bill Gross says PIMCO execs plotted to drive him out.
Pimco’s flagship Total Return Fund performed poorly past year and many investors withdrew funds, with assets falling below $100bn after peaking at close to $300bn in April 2013. In 2013 his fund posted its biggest losses in two decades as investors fled.
Gross refused. That was his last day. A few threatened to quit if he remained.
Backstabbing, betrayal, cheesecake (yes, really): the $200m (£130m) lawsuit filed by “Bond King” Bill Gross against the company he founded reads less like legalese and more like the plot of a high society thriller.
Again, according to the suit, Harris turned on Gross after he suggested that fees need be reduced, which Harris took to be “a direct, personal attack on Harris’ ongoing financial benefit from PIMCO and prompted Harris to become one of the most vocal supporters for ousting Mr. Gross”.
By allegedly forcing him out, Mr Gross claimed younger executives at Pimco could share larger profits and transform the company into an asset manager that invested in higher-risk equities and property.
In his 19-page suit, Gross demands damages of at least $200 million, including an $80 million bonus for the third quarter of 2014 that he didn’t collect because he left days before the time period came to an end.
The suit claims Diekmann was talked out of the deal within hours by PIMCO executives and that when Gross arrived at PIMCO to meet again with Diekmann, it was Doug Hodge who did all the talking. He has vowed to donate any payout he receives to charity.
However, the complaint said Hodge and other senior staff (including parent company Allianz) pushed for Gross’ termination.
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“Mr Gross was concerned that Pimco’s expansion into new investment fields posed a particular liability to the company and its investors should another significant event, such as the collapse of Lehman Brothers, occur”.
