TCW said in the lawsuit that Gundlach was fired for threatening to take actions that would have jeopardized the firm’s ability to manage clients’ fixed income assets.
TCW’s lawsuit claimed that an examination of Gundlach’s office on December 4, the day he was fired, revealed “plastic containers and bags containing green leafy substances and seeds, some explicitly labeled marijuana, as well as three tin foil tubes, the ends of two of which were burnt,” according to Reuters. According to the lawsuit, the office also contained dozens of pornographic magazines and videos.
A statement from DoubleLine Capital LP, the firm Gundlach opened days after being fired, said that “The false and hyperbolic personal attacks by TCW are obviously a gratuitous and irrelevant gutter tactic, which merely underscores the weakness of TCW’s claims.”
The Reuters report notes that Gundlach has already hired away more than 40 of his former colleagues, and since his departure, TCW clients have withdrawn billions of dollars from the Los Angeles-based firm’s bond funds.
The 39-page complaint filed on Thursday in California Superior Court in Los Angeles also named Gundlach’s new firm, DoubleLine, and three other former TCW employees who joined Gundlach as defendants. It seeks unspecified monetary damages, ownership rights of Gundlach’s new firm and other remedies. TCW said the “measurable” harm it had suffered already exceeded $200 million in addition to uncalculated “intangible” losses, according to the report.
In the complaint, TCW said it found evidence that several of Gundlach’s colleagues who joined him at DoubleLine had spent weeks downloading investment positions, analytical software and proprietary information about clients to portable computer drives. The suit claims that Gundlach and other colleagues confronted TCW Chief Executive Marc Stern and threatened to quit the firm at a September 3 meeting. After that meeting they “feigned satisfaction” while “secretly plotting their departures,” TCW said in the lawsuit.
The complaint is online at http://online.wsj.com/documents/TCWcomplaint.pdf