Fired TCW star money manager Jeffrey Gundlach took the stand Thursday in California Superior Court saying that any plan he considered to start his own money management firm would have involved giving TCW a cut of client fees.
But Mr. Gundlach, upon direct examination by TCW attorney John Quinn, said he never told CEO Marc Stern about the potential sharing arrangement because his intent was to stay at TCW.
“I never did that (communicated with Mr. Stern about the idea) because I never made the decision to leave,” Mr. Gundlach said.
Earlier, in a videotaped deposition that was played in court, Mr. Gundlach said he felt like he was “sucker-punched” when he was fired in December 2009 and maintained he had considered starting a rival firm only as a contingency plan.
TCW is suing Mr. Gundlach and his key associates, accusing them of stealing trade secrets in a plan to start rival money manager DoubleLine Capital. The firm was formed days after Mr. Gundlach and the others were fired. Mr. Gundlach is countersuing for more than $500 million in compensation.
In the taped deposition, Mr. Gundlach said he became concerned starting in September 2009 that he might be fired. Still, he said, he wanted to remain at TCW: “There's a distinct possibility I could have stayed at TCW my entire life.”
Mr. Gundlach contradicted himself several times in the videotaped depositions, first saying he didn't know of plans in early fall 2009 to find an office for his proposed rival firm in the months before he was fired, and then admitting he was involved in looking for a site.
In the videotape, Mr. Gundlach also said he didn't know why he had given an associate $75,000 in the fall of 2009. According to earlier testimony by others, the money was used to pay the fees for filing incorporation papers in Delaware for Mr. Gundlach's rival firm, under the holding name of Able Grape.
Mr. Gundlach also testified in the deposition, he didn't know a firm had to be registered.
Mr. Gundlach denied telling associates to download TCW information while they were still employed at the firm. He said he made a casual remark in September 2009 about taking the information but realized seconds later, “it was a bad idea.”
His key associates have testified in court that they removed documents and data from TCW computers under the direction of Mr. Gundlach, but insisted the material was never used in connection with DoubleLine's operations.
During his direct testimony, Mr. Gundlach did not dispute writing an e-mail to TCW Senior Vice President Barbara VanEvery, following a May 2009 meeting with Mr. Stern, saying he told Mr. Stern that he and other senior TCW portfolio managers would not “stabilize and save the firm without a reward.”
Mr. Stern had just returned to the company as interim CEO, a move that Mr. Gundlach opposed.
During his direct testimony, Mr. Gundlach told Mr. Quinn that he was upset because TCW's owner, French bank Societe Generale, had never made good on its promise to give employees equity.
Upon questioning by Mr. Quinn, Mr. Gundlach, who was TCW's chief investment officer, said he was paid $40 million in 2009, but should have been paid more.