Did skipping the boss’s parties at TCW cost Jeffrey Gundlach his job?
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The bitter court battle between star L.A. bond fund manager Jeffrey Gundlach and his former employer, TCW Group Inc., has stung both sides with embarrassing revelations and allegations -- exactly why these cases almost always are settled rather than go to trial.
On Wednesday, jurors in the case heard Gundlach’s long-time fund co-manager, Philip Barach, list what TCW founder Robert Day allegedly said were the reasons he fired Gundlach in December 2009 after 24 years at the money management firm.
At a meeting with Day just minutes after Gundlach had been ousted, Barach said he remembered the 67-year-old Day saying that three things were behind his decision to terminate Gundlach as TCW’s chief investment officer.
One was that Gundlach did not attend Day’s staff parties over the years, Barach said. He said he reminded Day that Gundlach ‘had gone to the last party.’
A second reason was that Gundlach ‘did not call the lows in the stock market in March 2009,’ Day said, according to Barach.
And third, Day allegedly told Barach, Gundlach was making ‘way too much money.’
The issue of Gundlach’s compensation -- $40 million in 2009 alone -- is what he asserts is the real reason he was fired, as his spectacular performance managing TCW’s bond assets made him a Wall Street star.
The trial was initially demanded by TCW, which sued Gundlach one month after ousting him, alleging that he and three lieutenants stole massive amounts of TCW’s proprietary information and used it to launch a rival money manager, DoubleLine Capital, just 10 days after Gundlach was booted.
Gundlach quickly countersued, alleging that TCW and its French bank parent, Societe Generale, terminated him to avoid sharing future fee income on the the tens of billions of dollars in bond assets that he had managed at TCW.
Each side is seeking hundreds of millions of dollars in damages from the other in the civil jury trial in L.A. County Superior Court.
Gundlach on Wednesday was on the stand for a fourth and final day. TCW’s lawyers have been trying to convince the jury that Gundlach had been disloyal to Day and Stern and had been plotting for more than a year to leave the firm. Gundlach has insisted that he merely had made tentative plans for a new company because he feared that TCW was trying to push him out.
On Thursday, TCW Chief Executive Marc Stern is expected to take the stand. Stern, 66, has been one of Day’s closest associates for decades. Gundlach has said that he was outraged that Stern came out of retirement in June 2009 to take the CEO post, which the 51-year-old Gundlach believed should have gone to him or another younger TCW executive.
The press-shy Day also is expected to be called to testify at some point in the trial, which may last until after Labor Day.
-- Tom Petruno
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