TCW today filed suit against its former chief investment officer, Jeffrey Gundlach, and his new asset management firm, DoubleLine Capital, accusing Mr. Gundlach of stealing TCW property, fraud and breach of fiduciary duty.
TCW seeks more than $200 million in damages in the lawsuit, filed in California Superior Court.
The suit claims that after Mr. Gundlach was terminated from TCW on Dec. 4, he “was able to invite hundreds of TCW clients to webcasts in which he touted the capabilities of his new enterprise and disparaged those of his former employer.”
The lawsuit claims the defendants conspired to steal proprietary TCW information; used confidential TCW information after leaving the company; and solicited business from TCW clients by making false statements about the firm.
“The sudden appearance of this new entrant in the money management business has been hailed by the financial press as a testament to Gundlach's organizational skill and financial savvy. The truth is much shabbier,” the suit states.
The lawsuit also claims that Mr. Gundlach was terminated from TCW in December because the firm discovered evidence of his and the other defendants' conspiracy to misappropriate TCW's confidential information and take it with them to a new company.
“Another compelling reason for TCW's termination of Gundlach's employment was Gundlach's essential unfitness to remain a senior TCW officer and fund manager,” according to the lawsuit. “His behavior had become erratic, increasingly and openly confrontational and starkly inconsistent with the conduct of a senior officer responsible for the management of billions of dollars of client funds and the supervision of TCW employees.”
The suit says that after Mr. Gundlach's departure from the firm, staff “discovered inappropriate contraband in his TCW offices, consisting of marijuana, drug paraphernalia, including paraphernalia bearing evidence of recent use, and a collection of 12 sexual devices, 34 hardcore pornographic magazines and 36 hardcore sexually explicit DVDs and videocassettes.”
The lawsuit also alleges that Mr. Gundlach began undermining TCW senior management in spring 2009, threatening to leave the firm and take key employees with him.
Mr. Gundlach was paid $40 million by TCW in 2009 and about $134 million over the last five years at the firm, according to the lawsuit.
TCW spokeswoman Erin Freeman declined to comment further.
Repeated attempts to reach Mr. Gundlach were not successful. Late today, DoubleLine issued a statement that said, “The allegations in the complaint are meritless and will be proven so in a court of law. TCW’s lawsuit is a blatant attempt to damage DoubleLine’s business and clients. DoubleLine and Mr. Gundlach are asserting their legal rights in a lawsuit to be filed shortly, which will demonstrate the thoroughly baseless nature of TCW’s claims and seek redress for TCW’s deplorable conduct. 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.”