The state jury awarded TCW no punitive damages, but did find that Gundlach and his co-defendants breached their fiduciary duty to the firm and took trade secrets.
The verdict comes after a six-week trial, which put the fund manager against his former employer. The news article reports, both sides sued each other after Gundlach was fired from TCW in December 2009 and he set up a rival money management firm, DoubleLine Capital. (See Former TCW Fund Manager Launches New Funds).
After starting the new firm, TCW accused him of stealing trade secrets, plotting to form a new company using TCW proprietary information, and gutting the firm of its entire mortgage-backed securities team. Gundlach filed a counter-lawsuit, alleging his former employer owed him hundreds of millions of dollars in compensation, and had secretly plotted to fire him when he was the company’s CIO.
After his termination, Gundlach formed DoubLine with three of his co-defendants in the trial. Approximately a total of 45 TCW employees, largely from the mortgage-backed securities group, joined his company.
Reuters notes that Gundlach’s new mutual fund, the DoubleLine Core Fixed Income Fund, gained 11% over the past 12 months, beating all of the more than 1,000 competing funds in its category, according to financial research firm Morningstar.
After the verdict, TCW attorney Susan Estrich said the company plans to seek $89 million in damages from the judge for the trade-secret violation.
The case is Trust Co of the West v. Jeffrey Gundlach et al.
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