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Manager Claims PIMCO Played Fast & Loose

SANTA ANA, Calif. (CN) - PIMCO fired an employee for reporting its financial violations to federal regulators, the man claims in Superior Court.

Jason Williams, 36, of Riverside, sued Pacific Investment Management Company for wrongful firing and Labor Code violations.

He claims PIMCO fired him for truthfully reporting that it was overvaluing securities and pushing securities to the public while "aggressively selling" its own holdings.

PIMCO is one of the world's largest managers of mutual funds managers, managing more than $2 trillion in assets, according to the company web page.

"Beginning in mid-2008, Williams noticed, documented, objected to and reported to defendants' management, compliance officers and his supervisors, including [nonparty] Chris Dialynas, misconduct involving senior managers," the complaint states. "Such misconduct included the following:

"a. In December of 2008, a senior manager directed Williams to arbitrarily elevate the rating a PIMCO analyst had assigned to a bond in order to place the bond in funds that had a higher rating requirement;

"b. In April of 2009, a senior manager stated on a television program that he was extremely optimistic about Bank of America credit while PIMCO was simultaneously

aggressively selling Bank of America convertible preferred securities;

"c. In 2008, market manipulation and breach of fiduciary duty to PIMCO clients in connection with a convertible preferred security, issued in the primary market, in which a senior manager allocated away from other PIMCO clients after the equity market had opened and the convertible preferred was trading up around 10 percent in the secondary market;

"d. In August of 2008, senior management intentionally violated PIMCO prospectus for a Convertible Bond Fund;

"e. In August of 2008, breach of fiduciary duty to client by ignoring client request to purchase a significant position in a PIMCO Convertible Bond Fund;

"f. Between or around late 2008 and early 2009, senior management directed the internal transfer of illiquid securities, securities that had been arbitrarily overvalued, from the PIMCO PARS hedge fund to other PIMCO funds, to the detriment of the holders of the receiving funds:

"g. In or around late November or early December, 2008, attempted unlawful trading on inside information involving stock in El Paso Corporation;

"h. In or around January of 2012, short-selling a High Yield CDX 17 to the disadvantage of other PIMCO clients who did not receive their pro rata share of their allocation which had been the standard for the previous month plus; and

"i. In or around March of 2012, artificial manipulation of the price a PIMCO Total Return Fund, an exchange traded fund.

"In response to Williams's objections, Defendants' managers arbitrarily reduced Williams's compensation and subjected him to verbal abuse."

PIMCO fired him for reporting the misconduct, Williams says.

"On February 17, 2012, Williams notified Robin Nabors, a defendants' human resources representative, of his complaints to SIGTARP [Special Inspector General for the Troubled Asset Relief Program] and his cooperation in the agency's investigation. Soon after, Williams notified PIMCO's counsel of his communication with federal agents," according to the complaint.

"On March 6, 2012, approximately three weeks after Williams notified defendants of his complaints to the federal agents, defendants terminated his employment because of his disclosures to a federal law enforcement agency and for his cooperation in the investigation that arose from it."

Williams says his bosses fired him on a pretext, claiming it was performance, though it was retaliation for his whistle blowing.He claims his actions were protected under the Sarbanes-Oxley Act, and the Dodd-Frank Wall Street Reform and Consumer Protection Act.

He seeks lost earnings, damages and punitive damages and a $10,000 civil penalty for each violation of labor laws.

He is represented by David Spivak of Beverly Hills.

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