Bond-Fund Star Gundlach: 'There Was Nothing Special About TCW Data'

(August 16, 2011) — Fund manager star Jeffrey Gundlach, currently engaged in a lawsuit for allegedly stealing trade secrets from his former employer, has testified that he did not need the company’s data to start his rival firm.

Gundlach, formerly the fixed-income guru at asset-management company Trust Company of the West (TCW), has been accused by TCW of stealing the firm’s system for evaluating bonds to set up a rival money-management business, DoubleLine Capital. However, under questioning by his own attorneys, he asserted that the TCW system for evaluating complex bonds used “the same data everyone else looked at,” the Los Angeles Times reported. Furthermore, he asserted that DoubleLine was built from scratch, with the computer software and data systems purchased from a third-party vendor.

In December 2009, TCW fired Gundlach as its chief investment officer. He formed DoubleLine just 10 days after that, with most of his bond-team members leaving TCW to join him. DoubleLine has attracted about $14 billion from investors in 20 months.

Gundlach told a Los Angeles jury that during a meeting with TCW Chief Executive Officer Marc Stern when he believed he was about to get fired, he offered roughly $350 million for 51% of the firm. “If you fire me, you’re going to blow up the firm,” Gundlach told Stern during the meeting, according to Bloomberg.  

While TCW — which seeks $375 million in damages — claims Gundlach stole its trade secrets, including client portfolio data, to start DoubleLine, Gundlach has countersued TCW and its parent firm, French bank Societe Generale. Seeking about $500 million, he accused the firm of firing him to avoid paying him a hefty chunk of promised income, and said that concerns over being fired drove him to develop a backup plan to stat his own money management firm.