Jeffrey Gundlach, fired TCW chief investment officer, testified Tuesday that he warned employees of his new firm, DoubleLine Capital, that any TCW files and information they had downloaded would have to be returned.
During Mr. Gundlach's third day on the witness stand in California Superior Court in Los Angeles, his attorney, Mark Helm, showed the jury several memos from Mr. Gundlach dating to Dec. 18, 2009 — the same day DoubleLine opened for business — that ordered any TCW material be returned.
TCW attorneys have alleged in court that downloaded material was returned only after TCW threatened to file suit against Mr. Gundlach and his associates. TCW claims Mr. Gundlach and three of his associates, who helped him found DoubleLine, stole trade secrets that enabled DoubleLine to get off the ground within weeks of their being fired from TCW in early December 2009.
Mr. Gundlach told the jury he was “furious” after he learned that one employee, Jeffrey Mayberry, didn't meet the deadline to return the material; he said that “was unacceptable.”
Mr. Mayberry, a senior official at DoubleLine, testified earlier in the trial that he downloaded TCW files before being dismissed from the firm in December 2009. Mr. Mayberry said he had followed the directions of his boss at TCW — Cris Santa Ana, who was a managing director — in downloading the information. Mr. Santa Ana is now chief risk officer at DoubleLine.
Mr. Santa Ana testified earlier in the trial that Mr. Gundlach told him in September 2009 to begin backing up TCW data because it might be useful to have. He and Mr. Mayberry are co-defendants in the lawsuit filed by TCW.
Mr. Gundlach said he fired one employee, who is only identified as JP, a junior portfolio analyst, in early 2010 after he had learned that the employee had failed to return all the information to TCW.
In separate testimony Tuesday, Mr. Gundlach said TCW CEO Marc Stern was hostile to him after a May 29, 2009, meeting, in which Mr. Gundlach and other top portfolio managers had expressed their concern that Mr. Stern, president of TCW until 2005, had come back as CEO. Mr. Gundlach said he and other portfolio managers wanted TCW run by a management committee that Mr. Stern could have chaired.
Following the meeting with Mr. Stern, Mr. Gundlach said he feared the new CEO was trying to keep two of Mr. Gundlach's top lieutenants at TCW if Mr. Gundlach were fired. “They were writing me off,” he said, adding that's when he became concerned he could be terminated.
Mr. Helm spent much of Tuesday trying to humanize Mr. Gundlach to the jury. Mr. Gundlach explained that he grew up in a working-class family in Buffalo, N.Y., and at one time was a rock drummer with only an occasional gig. Mr. Gundlach, who has a mathematics degree from Dartmouth College, told the jury he dropped out of graduate school after a year after determining the only career he could get with a math degree was either as a teacher or as an analyst with the CIA. He said neither career path appealed to him, gathering some smiles from the jury.
Mr. Gundlach denied calling himself “the pope,” as TCW's attorneys had maintained. He said the nickname was developed by an unidentified third party and referred to his meeting with an investment prospect when they were on the “1-yard line” and were close to making a deal.