Global bond guru Bill Gross sued Pacific Investment Management Company LLC (PIMCO) on Thursday, accusing a “cabal” at the bond firm he cofounded of forcing him out to grab a bigger slice of its profits.
Gross, in a California lawsuit that also targets PIMCO’s German parent Allianz SE, is seeking a jury trial over his complaint that he was dismissed unfairly last year and cheated of hundreds of millions of dollars in compensation.
“Driven by a lust for power, greed, and a desire to improve their own financial position and reputation at the expense of investors and decency, a cabal of Pacific Investment Management Company LLC managing directors plotted to drive founder Bill Gross out of PIMCO,” the complaint said.
“Their improper, dishonest and unethical behavior must now be exposed,” it said.
The colorfully written suit alleges wrongful termination and breach of contract and seeks damages plus interest and attorneys fees.
PIMCO said it will fight the claims.
“This lawsuit has no merit and our legal team will be responding in court in due course,” a PIMCO spokesman said. “Our focus remains on our clients and their investment portfolios.”
The suit recasts the events that led to the departure of “bond king” Gross for rival Janus Capital Group in September last year. At the time, PIMCO chief executive Douglas Hodge thanked Gross for his service, but said “over the course of this year it became increasingly clear that the firm’s leadership and Bill have fundamental differences about how to take PIMCO forward.”
Gross accused another PIMCO executive, Andrew Balls, of orchestrating a series of negative media leaks that cast the resignation of Gross’ would-be successor, Mohamed El-Erian, in January last year as Gross’ fault.
When Balls’ role in the negative media campaign was uncovered in an internal probe, Hodge and other senior PIMCO officials refused to dismiss the executive, part of what Gross’ suit alleged was a larger plot to oust him “for their own personal benefit and egos.”
Gross was paid bonuses of US$16 million compared to more than US$250 million expected for last year, despite working nearly three-quarters of the year. His claim seeks compensation for the bonus, as well as for being forced to leave PIMCO before receiving stock options and equity grants that had not yet vested.
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