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Monday, April 22, 2024 | Back issues
Courthouse News Service Courthouse News Service

Founder Sues Pimco for $200 Million

SANTA ANA, Calif. (CN) - Billionaire Bill Gross on Thursday sued Pimco, the company he founded, for $200 million, claiming that "a cabal" of Pimco officers, "driven by a lust for power, greed ... and reputation at the expense of investors and decency," drove him out of his own business.

Gross sued Pacific Investment Management Co. (Pimco) and its corporate parent Allianz Asset Management of America, both based in Newport Beach, in Orange County Superior Court. He claims the company breached contract, breached faith and constructively fired him. Gross left Pimco in September last year and eventually went to work for Janus mutual funds.

Gross founded Pimco about 40 years ago and managed it into a colossus in fixed-income mutual funds. Its Total Return Fund had more than $300 billion in assets before Gross's departure.

Gross's 21-page lawsuit depicts his final days at Pimco as a naked struggle for power and money.

"Mr. Gross's ongoing success at Pimco proved to be his undoing," states the complaint, filed by Patricia Glaser with Glaser Weil Fink Howard Avchen & Shapiro. "In the minds of certain younger executives at Pimco, Mr. Gross's ongoing presence at the company checked their own financial and career ambitions. Under Pimco's profit-sharing plan Mr. Gross was entitled to receive 20 percent of the entire profit-sharing bonus pool each year. By forcing him out of Pimco, the younger executives would split Mr. Gross's share of the bonus pool amongst themselves."

Gross also paints himself as a defender of Pimco customers against younger, greedy executives. "He championed reasonable fees for Pimco's services and was vocally skeptical inside the firm of a select group of the younger executives' desire to transform Pimco into a high-risk, high-fee asset-management company that invested in riskier equities and leveraged real estate investments, as opposed to the stable bonds that built the firm's reputation," the complaint states.

"As long as Mr. Gross remained at the company he founded, these younger executives were unable to transform Pimco, increasing client risk and their own compensation. As a consequence, Mr. Gross became the target of a power struggle within Pimco - a struggle that eventually led to his wrongful and illegal ouster from the company he founded and a struggle where Pimco wrongly and illegally denied Mr. Gross hundreds of millions of dollars in earned compensation."

He demands at least $200 million.

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