Gloves Off: Gross Seeking 'At Least $200M' from PIMCO Over Ouster

Oct 8 2015 | 1:06pm ET

By Jennifer Ablan and Jonathan Stempel (Reuters) - Famed bond investor Bill Gross has sued his former employer Pacific Investment Management Co and its parent Allianz SE for $200 million, claiming he was wrongfully ousted by a "cabal" of executives who wanted his share of the bonus pool.

In a complaint filed on Thursday in the California Superior Court in Orange County, Gross said Pimco managing directors were "driven by a lust for power, greed, and a desire to improve their own financial position and reputation" in their ultimately successful plot to drive him out.

Pimco spokesman Mike Reid declined to comment. Allianz had no immediate comment. Gross, through a spokesman, declined to comment.

The lawsuit ratchets up vitriol between Gross, 71, who now runs the Janus Global Unconstrained Bond Fund for Janus Capital Group Inc, and Pimco, which he co-founded and built over four decades into the largest U.S. bond fund complex.

Known on Wall Street as the "Bond King," Gross left Pimco unceremoniously in September 2014, eight months after his management style helped prompt second-in-command Mohamed El-Erian to quit.

That style, along with investors outflows and a weak performance by the flagship Pimco Total Return Fund, which Gross had built into the world's largest bond fund by assets, were also the subjects of much negative press in 2014.

Total Return's assets peaked at $293 billion in April 2013, but have since fallen to below $100 billion. It has been surpassed in size by the Vanguard Total Bond Market Index fund.

In the complaint, Gross said younger Pimco executives plotted to drive him out, and share in his 20 percent stake in Pimco's bonus pool, because they believed his presence was impeding their careers and limiting their paychecks.

The complaint also outlines Gross' view of his ouster, a plan he said was "hatched" by Daniel Ivascyn, who succeeded him as Pimco's group chief investment officer and allegedly helped recruit others to the cause.

As pressure built, Gross said he began negotiating to resign as chief investment officer, cut his bonus, give up oversight of Total Return, and as "further humiliation" even be forbidden from entering Pimco's offices in Newport Beach, California.

Gross said he worked out an arrangement with Allianz Chief Executive Michael Diekmann, but that Pimco officials including current CEO Douglas Hodge "somehow" overruled their boss and came up with a lesser role that effectively meant his firing.

According to the complaint, Gross was "on track" to receive a bonus topping $250 million in 2014, with most of it paid late in the year.

Pimco's bonus pool totaled $1.3 billion in 2013, and Gross' pay that year topped $300 million, the complaint said.

The lawsuit accuses Pimco of constructive termination, breach of contract, and exercising bad faith.

Patty Glaser, the lead lawyer for Gross, in a statement said any recoveries will go to charity, including the Pimco Foundation.

The case is Gross v. Pacific Investment Management Co et al, California Superior Court, Orange County.


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