Pimco Accuses Bill Gross of Leaking Confidential Bonuses


Bill Gross.

Photographer: Patrick T. Fallon/Bloomberg
  • Pimco fires back at co-founder in breach of contract lawsuit
  • First courtroom face-off in bond manager’s case set for Friday

Pimco escalated its legal battle with estranged co-founder Bill Gross by saying he leaked confidential pay information to the media and may have destroyed documents in violation of court rules.

Pacific Investment Management Co. made the allegation ahead of a Friday court hearing on Gross’s lawsuit accusing the company of forcing him to resign so it wouldn’t have pay him a bonus. Gross is asking a judge to order Pimco to provide him with internal documents he says he needs to prove his case.

“Discovery has revealed that Mr. Gross went so far as to leak confidential Pimco compensation data to the news media after he left the company,” Pimco said in the filing Tuesday, “as part of his sad obsession with attacking his former employer and colleagues.”

Gross also may have improperly destroyed documents relevant to his lawsuit, according to the filing in California state court in Santa Ana.

In a document from Gross’s lawyer included in the filing, Gross said he provided the bonus information to a Bloomberg reporter. He said that Pimco didn’t have a right to take any adverse action against him for disclosing the information.

Janus Capital

Pimco said Gross leaked the information in November 2014, after he had left the company and was working for Janus Capital Group Inc.

Gross also acknowledged providing eight or nine managing directors with confidential 2013 bonus information for each of the firm’s managing directors in August or September 2014, while he was still at Pimco, according to the filing. Pimco said he mailed the information anonymously.

Gross, 72, last week accused the Newport Beach, California-based asset management firm of “bad faith obstruction” for withholding potential evidence about its investment strategy and its compensation practices. Gross argues that information will support his claims that other management directors wanted his share of the bonus pool after he’d had a falling out with them over Pimco’s move into more risky investments.

“Pimco’s latest motion is an effort to deflect blame from its litigation misconduct by making off-topic insults and baseless accusations against our client,” Gross’s attorney, Patricia Glaser, said in an e-mailed statement. The only party trying play ‘hide the ball’ is Pimco.”

Pimco has argued that Gross’s broad demand for records of all Pimco’s interactions with government regulators and every meeting of its most senior executives over the past five years is irrelevant to the narrow employment claims at stake in the lawsuit. The company also claims that disclosing executive compensation files would violate the privacy rights of people not involved in the lawsuit.

Bloomberg reported in November 2014, two months after Gross left the firm, that he received a bonus of about $290 million in 2013. Other bonuses reported for 2013 included $230 million for Mohamed El-Erian, then Pimco’s chief executive officer, $70 million for Daniel Ivascyn, who succeeded Gross as chief investment officer, and $45 million for Douglas Hodge, who succeeded El-Erian as CEO. El-Erian, who is now chief economic adviser to Pimco’s parent, Allianz SE, is also a Bloomberg View contributor.

Gross now runs the Janus Global Unconstrained Bond Fund.

Pimco Departure

In Tuesday’s request for a court order that Gross needs to produce documents he has so far held back, Pimco alleges that a subpoena to Janus turned up e-mails between Janus Chief Executive Officer Richard Weil and Gross regarding his departure from Pimco, which Gross himself didn’t turn over, as well as a personal e-mail account Gross hadn’t disclosed.

According to Pimco, Gross claims that he only has printouts of most of the e-mails he has given the company so far, which indicates that he may have deleted the electronic versions with the associated metadata even after he was required to preserve these because of the litigation.

“We have been 100 percent transparent with respect to disclosing information in this lawsuit,” Glaser said. “We have hidden nothing.”

The case is Gross v. Pacific Investment Management Co., 30-2015-00813636, California Superior Court, Orange County (Santa Ana).

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