Feds Weigh In On TCW-DoubleLine Dispute

Dec 10 2010 | 9:36am ET

The U.S. Justice Department has inserted itself into the nasty battle between TCW Group and its former chief investment officer, Jeffrey Gundlach.

Gundlach's new hedge fund, DoubleLine Capital, said the U.S. Attorney's office in New York and the special inspector general for the Troubled Asset Relief Program have questioned the Los Angeles-based firm's employees about TCW's allegations that DoubleLine, which features more than a few ex-TCW employees, stole its proprietary information.

The TARP inspector is involved because Gundlach was supposed to manage a fund at TCW participating in the bailout program.

"The federal criminal grand jury investigation relates to the theft of trade secrets from TCW by DoubleLine and certain of its principals," a lawyer for TCW, Steen Madison, said. TCW filed another lawsuit against DoubleLine and Gundlach last week, alleging that the hedge fund is using TCW's proprietary information and systems.

Gundlach denies any wrongdoing.

"Our superior investment results relative to those generated by TCW this year are a priori proof of the false nature of TCW's claim. I challenge TCW to publicly identify a single alleged 'trade secret' that DoubleLine is using," he said in a statement. "Based on what TCW has produced at court, such an attempt should provide significant comedy and be the object of derision at every trading desk in America."

DoubleLine said it is cooperating with the federal investigation.

Gundlach's departure from TCW was ugly: The firm fired Gundlach slightly over a year ago for allegedly building DoubleLine while still on its payroll. It also said a search of his office after his firing uncovered marijuana and drug paraphernalia, as well as a veritable library of "hardcore" pornographic materials.

In Depth

Related-Company Fees: Normal Industry Practice or Conflicted Compensation?

Nov 11 2015 | 4:23pm ET

Regulatory agencies as well as investors are increasingly exploring whether certain...


Ferrari Roars in Wall Street Debut

Oct 21 2015 | 4:28pm ET

Shares of supercar maker Ferrari jumped as much as 15 percent to a high of nearly...

Guest Contributor

Private Debt - What is the Opportunity?

Nov 11 2015 | 3:28pm ET

In this contributed article, Rob Allard, founding partner of Firebreak Capital...


Editor's Note

    Oct 21 2015 | 10:41am ET

    One of the most unique charity benefits in the hedge fund industry, A Leg To Stand On's (ALTSO's) Hedge Fund Rocktoberfest - NYC, raised nearly $500,000 last Thursday thanks to the generous support of major sponsors and nearly 1,400 attendees from the Tri-State finance, business and hedge fund communities. Read more…