TCW Cuts Hedge Fund Fees After Firing Manager

Feb 8 2010 | 8:34am ET

TCW Group has moved to quell investor discontent after it called its fired chief investment officer a drug user and pornography addict by cutting fees.

The Los Angeles-based firm radically slashed fees on two distressed-debt hedge funds that had been set up and managed by Jeffrey Gundlach, who was fired in December. In a lawsuit against Gundlach, TCW accused him of trying to poach its clients and employees, calling his new firm “entirely the product of the defendant’s theft of TCW property, fraud and breach of fiduciary duty.”

For investors in the Société Générale unit’s TCW Special Mortgage Credit Funds I and II, it means a big discount. TCW has halved the funds’ management fees to 1% from 2%, and slashed its performance fees to 5% from 20%.

Investors were also given the opportunity to redeem as part of a key-man clause triggered by Gundlach’s exit.

Both funds were set up to take advantage of the credit crisis. They are now being managed by the fixed-income team led by Tad Rivelle that TCW acquired from Metropolitan West Asset Management.

Gundlach has founded DoubleLine Capital with about 45 former TCW employees. His new firm is backed by Los Angeles hedge fund Oaktree Capital Management, itself founded by TCW veterans.

TCW, for its part, has sought to sully its former star’s reputation. In its lawsuit, the firm alleges that it found marijuana, drug paraphernalia, 34 “hardcore” pornographic magazines, 36 pornographic DVDs and videos and “a collection of 12 sexual devices” in Gundlach’s former office following his ouster.


In Depth

Q&A: Filippo Pignatti Morano On The Ultimate Alternative Investment...Classic Cars

Jan 29 2015 | 12:37pm ET

In 2011, Filippo Pignatti Morano launched a fund to invest in classic cars. FINalternatives...

Lifestyle

Looking For A Hedge Fund Manager? Try Davos

Jan 28 2015 | 8:48am ET

Davos, Switzerland seems to have become the hedge fund capital of the world—at...

Guest Contributor

Five Tips For Successfully Marketing Your Hedge Fund

Jan 30 2015 | 9:14am ET

When it comes to the hedge fund industry, the notion of “build it and it will...

 

Editor's Note