He left the company previous year under, shall we say, unpleasant circumstances.
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Bill Gross at the Morningstar, Inc.
Bill Gross posed for a portrait in 2009 while he was still at Pimco.
The lawsuit takes to new levels the animosity between Mr Gross and Pimco, which he co-founded and expanded over four decades into the largest U.S. bond fund.
The billionaire bond investor filed suit Thursday in Orange County, California, asking for more than $200 million in damages.
Gross was on track to receive a bonus for 2014 of around $250 million at PIMCO.
Gross accuses a “cabal” of managers of forcing him out of the company. The complaint [makes it look like PIMCO executives had] a calculated plan to not pay an earned bonus.
Like the newsletter items he is famous for, Gross’s complaint strays far afield before coming to its point.
There was also a personality and ego clash with Mohamed al-Erian, former Pimco CEO, who left the company in 2014. The fund, which peaked at more than $292 billion under management in April 2013, reported about $95.5 billion under management as of September 30, with much of the outflow during the months immediately after Gross’ departure.
According to the lawsuit, Gross’s offer to let El-Erian take his place heading a portion of PIMCO’s investment committee forced El-Erian to, in effect, directly own the success or failure of his risky expansion projects.
Gross claims he was pleased with the El-Erian hiring.
Rumors were afloat that Gross’ exit from PIMCO was a result of mounting tensions in PIMCO, which were weighing down Gross.
The Gross suit also alleges that Pimco’s current chief investment officer, Daniel Ivascyn, conspired with other executives to force Gross’ “ouster”. Pimco says Gross’s case is without merit. “Our focus remains on our clients and their investment portfolios”. Unknown to PIMCO or Mr. Gross, less than two hours after the meeting adjourned, PIMCO managing director Andrew Balls, who was present for the announcement regarding El-Erian, placed a call to a reporter at the Financial Times, the newspaper for which Balls had previously worked.
Pimco has long had a reputation for its hard-driven environment, said to have been instilled by Mr Gross.
Gross is right, though, that the coverage of El-Erian’s departure tended to make Gross look bad.
His side of the story contains a few juicy nuggets, basically along the lines that Bill Gross was not a hard jerk, but rather the executives who ousted him were plotting jerks.
In the suit, which is now available online, the fixed-income expert says he was wronged and deserves compensation.
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Patty Glaser, a lawyer for Gross, said proceeds from the lawsuit will go to charity, including the Pimco Foundation, which contributes to educational and other causes. The higher-fee investment vehicles Ivascyn oversaw had generated “hundreds of millions of dollars” each year for Pimco, yet the bonus pool didn’t allocate profits to specific business units, instead pooling them in one bucket, the complaint states.
