Testimony Claims Gundlach Discussed PIMCO, WAMCO Offers

Recent court testimony claims bond fund star Jeffrey Gundlach spent his last months at the company claiming he had job offers from PIMCO and Western Asset Management.

(August 31, 2011) — Bond fund star Jeffrey Gundlach had allegedly been in discussions to leave Trust Company of the West (TCW) to succeed Pacific Investment Management Co.’s (PIMCO) Bill Gross, court testimony has revealed.

“He had been in conversations with PIMCO about joining them,” said Roger Brossy, a consultant who worked with Gundlach in 2009, Reuters reported. Meanwhile, testimony from TCW’s Michael Conn described a summer 2009 meeting when Gundlach claimed PIMCO would “love to have him.”

Gundlach, formerly the fixed-income guru at asset-management company TCW, has been accused by the firm of stealing its system for evaluating bonds to set up a rival money-management business, DoubleLine Capital, whose Total Return Bond Fund has reached $10 billion in assets under management, just 16 months after its launch in April 2010.

The Los Angeles Times reported that under questioning by his own attorneys, Gundlach — who was fired from TCW in December 2009 — asserted that his previous employer’s system for evaluating complex bonds used “the same data everyone else looked at.” Furthermore, he asserted that DoubleLine was built from scratch, with the computer software and data systems purchased from a third-party vendor.

In a countersuit, Gundlach has accused TCW 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.

To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742