Gross Said To Settle PIMCO Lawsuit For $81M

Mar 27 2017 | 5:09pm ET

By Jonathan Stempel and Jennifer Ablan (Reuters) - Bill Gross has reached a roughly $81 million settlement of his lawsuit against Pacific Investment Management Co, ending a bitter 2-1/2-year drama over the departure of the star bond investor from one of the world's biggest money managers.

Terms of the accord were not disclosed, but were confirmed by two people familiar with the matter who asked not to be named because of confidentiality concerns.

Proceeds are going to charity, Gross and PIMCO said in a joint statement that called the settlement "amicable."

The accord quietly ends an acrimonious battle over the 72-year-old billionaire's Sept. 2014 departure from PIMCO, played out through the press and then in his $200 million lawsuit against the unit of German insurer Allianz SE.

Gross, who now works for Janus Capital Group, left PIMCO following negative reports about his leadership and weak returns at its flagship PIMCO Total Return, which he managed and was once the world's largest bond fund.

In his complaint filed in a California state court, Gross accused top PIMCO executives including group chief investment officer Dan Ivascyn of plotting to oust him so they could divide his bonus among themselves.

PIMCO, based in Newport Beach, California, countered that Gross had no employment guarantee, and that his "egregious misconduct" and erratic behavior would have justified his being fired had he not resigned.

The joint statement reflected PIMCO's recognition of Gross' role in building the firm over four decades into a mutual fund powerhouse, even if his last months proved uncomfortable.

"Bill Gross has always been larger-than-life," Ivascyn said. "Bill has had an enormous influence on PIMCO and the careers of many who have passed through its halls. He built this business from the ground up and we have great respect and admiration for his talents."

For his part, Gross said: "I've always been amazed by my success, and grateful for the opportunity to make a difference in the world. I'm glad that can continue."

Gross has been unable at Janus to replicate his success at PIMCO. His Janus Global Unconstrained Bond fund has just $1.9 billion of assets, and has been outperformed by 80 percent of its peers in the last year, Morningstar said.

Janus last October announced a plan to merge with London-based Henderson Group PLC.

A request that Gross' lawsuit be dismissed was filed on Monday with the California court. Gross is worth $2.5 billion, according to Forbes magazine.

The case is Gross v. Pacific Investment Management Co et al, California Superior Court, Orange County, No. 2015-00813636.


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