News > Asset Management

PIMCO says former bond king Gross needs better screenwriter

By ValueWalk
Asset Management



Former bond king Bill Gross needs a better screenwriter, says the investment giant Gross founded. On Monday PIMCO asked a California state judge to dismiss a lawsuit filed by Gross, saying reads more like a movie script than a strong legal argument.

PIMCO: Gross legal document reads more like a screenplay than a court pleading

Calling Gross’s lawsuit against the firm he once headed “a sad postscript to what had been a storied career at PIMCO,” lawyers for PIMCO wrote in their rebuttal filed Monday in California Superior Court in Orange County. PIMCO, headquartered in Newport Beach, said the complaint reads “more like a screenplay than a court pleading” in that it “uses irrelevant and false personal attacks on Mr. Gross’s former colleagues in an apparent effort to distract attention from the fundamental failings” of the legal complaint.

In its rebuttal, PIMCO made the case sound more like a divorce trial with a despondent lover, claiming Gross was engaging in “reputational warfare.” Like any good divorce, it’s time to turn the page, forget about the past and stop blaming others regarding financial problems. “Pimco has moved forward since Mr. Gross’s resignation,” PIMCO’s rebuttal said. “It is time for him to do the same, instead of treating this court as a forum to engage in the kind of reputational warfare embodied in his legally groundless complaint.”

PIMCO said the Gross lawsuit “is only the latest step in Mr. Gross’s effort to resurrect a personal reputation damaged by his own unacceptable behavior.”  During his final year at PIMCO, Gross engaged in some rather unusual behavior, which the PIMCO lawsuit didn’t forget:

During his final year with PIMCO, Mr. Gross engaged in a pattern of conduct that was incompatible with the values and standards that PIMCO expected of those entrusted with its leadership. When Mr. Gross finally came to understand that PIMCO would not exempt him from these standards, he abruptly resigned from the firm without notice or transition— disregarding the potential impact on the individual and institutional clients whose assets he was responsible for managing.

Bill Gross had a messy divorce from the love of his life: PIMCO

As reported in ValueWalk, the October legal complaint attacked PIMCO and its management head on. “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 (“PIMCO”) managing directors plotted to drive founder Bill Gross out of PIMCO in order to take, without compensation, Gross’s percentage ownership in the profitability of PIMCO,” the legal complaint reads in its first paragraph, not holding back. “Their improper, dishonest, and unethical behavior must now be exposed.”

In his initial charges Gross said his one-time anointed successor Mohamad El-Erian didn’t want to be held accountable for performance on risky investments. El-Erian had engaged in a risky hedge fund approach while Gross wanted to stick to his bond market strategy. After El-Erian’s “abrupt departure,” the lawsuit charged that PIMCO management conspired to rid the firm of Gross so they could be done with his high percentage of profits he took for himself.

PIMCO essentially says in court documents that the charges made against the firm are irrelevant and more dramatic than substantiative. Lawyers from Gross note that PIMCO did not directly dispute any of the charges in their rebuttal, saying they “are confident in our case moving forward. Notably, Pimco’s papers do not dispute the substance of Mr. Gross’s allegations in any material way.”

Gross currently managed nearly $1.4 billion in the Janus Global Unconstrained Bond Fund, which recently witnessed a high profile redemption in the wake of his lawsuit. This is but a shadow of his former glory when at his peak Gross was managing nearly $293 billion at the PIMCO Total Return Fund and had a reputation for consistent industry outperformance. With a record of under-performing nearly three quarters of his peers in 2015, according to Morningstar, the former “bond king” is looking to regain his lost luster.

The full court filing can be found here pimco.

This story first appeared in ValueWalk.

Photo: Dennis Skley

Subscribe to our Newsletter

Be one of the first to experience the future of financial services