An irate Bill Gross is suing Pimco for hundreds of millions of dollars

It’s Bill’s turn.
It’s Bill’s turn.
Image: Reuters/Robert Galbraith
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This post has been updated with comments from Pimco and Gross’s legal representation.

Bill Gross is the iconic founder of Pimco, the architect of its intense management style, and the man who built what until recently was the world’s biggest bond fund. His ouster last September and move to Janus Capital after a run of miserable performance was a shock to the industry. Now Gross is trying to tell his side of the story.

He’s suing Pimco (Pacific Investment Management Company), which is based in Newport Beach, California, and its parent company Allianz, for a sum in the “hundreds of millions of dollars,” accusing a “cabal” of his former underlings of conspiring to wrongfully push him out in pursuit of a bigger share of the firm’s profits according to the complaint, posted online by the Financial Times. The case was filed Thursday in a state court in Orange County, California.

Update (Oct. 8): “This lawsuit has no merit and our legal team will be responding in court in due course,” Pimco spokesman Michael Reid said in a statement to Quartz. “Our focus remains on our clients and their investment portfolios.”

The rather dramatic complaint is consistent with Bill Gross’s style. It describes Pimco executives as “driven by a lust for power, greed, and a desire to improve their own financial position and reputation at the expense of investors and decency.”

Specifically, it argues that top executives at the firm wanted a bigger share of the company’s massive bonus pool, of which Gross took home 20%, worth $300 million in 2013.

The lawsuit singles out current Pimco chief investment officer Daniel Ivascyn and his own former No. 2, Mohamed El-Erian, and claims they wanted to drive the company towards riskier strategies.

In describing the circumstances Gross’ departure, the complaint states ”Ivacyn and the other conspirators had been able to spring their trap.”

It’s negative scrutiny, and a potential payout, that Pimco won’t particularly enjoy. Huge outflows of client money that started before Gross departed continued for some time, and the company is only now beginning to stem them.

Update (Oct. 8): Gross’s move doesn’t appear to be about the money itself: He is a billionaire twice over, and his lead attorney Patty Glaser said in a statement to Quartz that all proceeds of the lawsuit will go to charity, including the Pimco Foundation. She had no further comment.

The suit is an indication Gross feels very strongly that an injustice was done, and apparently he wants his day in court; he probably also wants to change a public narrative that points to his occasionally erratic tendencies and recent bad market calls as major reasons for his ouster.