Memos from top officials of French bank Societe Generale, owners of money manager TCW, show that bank officials discussed plans to remove TCW Chief Investment Officer Jeffrey Gundlach as early as June 2009.
The e-mails displayed on Tuesday in California Superior Court in Los Angeles showed deep concern among SocGen officials about Mr. Gundlach's continued employment at TCW. “We believe that he (Mr. Gundlach) should be removed, but this is going to require deep reflection and a very solid plan for replacing him,” wrote Jean-Pierre Mustier, then SocGen's top asset management official, to President Frederic Oudea on June 13, 2009.
However, deposition testimony given by SocGen's deputy CEO, Severin Cabannes, and read into the record on Tuesday showed that top officials said they left the ultimate decision on Mr. Gundlach to top TCW management.
TCW Chairman Marc Stern had testified previously in the trial between TCW and Mr. Gundlach that Mr. Stern he began to hold meetings in June 2009 to look for a replacement for Mr. Gundlach in case he had to be fired or left the firm suddenly to join another firm or start his own. But Mr. Stern testified that plans to terminate Mr. Gundlach did not begin in earnest until early September 2009.
However, some of the SocGen e-mails presented by Mr. Gundlach's lawyers on Tuesday seem to show that a decision to terminate Mr. Gundlach was already in the works as early as June 2009.
In another e-mail displayed by Mr. Gundlach's lawyers, dated June 6, 2009, Mr. Mustier wrote to senior SocGen officials about Mr. Gundlach: “They're looking at our options to force him out, (to proactively) replace him, (act defensively) if he leaves.” In a third e-mail that Mr. Mustier wrote to top SG officials on July 31, he cited Robert Day, TCW's founder and chairman, writing, “R. Day thinks that Mr. Gundlach must leave.”
The e-mail said “the backers of Citibank tell us we cannot mortgage or sell TCW if the Mr. Gundlach issue is not handled, either he falls into line or he leaves.” The memo goes on to say “the probable conclusion is we will have to sever and remove Gundlach.”
During the Aug. 31 testimony, Mr. Day in a videotaped deposition said he had little memory of the events surrounding Mr. Gundlach's departure.
TCW alleges that Mr. Gundlach and key associates stole trade secrets to help form their new firm, DoubleLine Capital, in December 2009. Mr. Gundlach and DoubleLine have countersued, saying TCW fired Mr. Gundlach in early December 2009 because the company did not want to pay him and his team incentive fees, and future and back compensation, totaling more than $500 million.