Allianz says Bill Gross’s $200 million lawsuit has no merit

Pimco’s Total Return Fund, overseen directly by Gross, was by far the biggest bond fund with more than $300 billion in assets at its peak. Bill Gross at the Morningstar, Inc. Gross’s relationship with his colleagues also deteriorated. Gross was entitled to 20% of Pimco’s bonus sharing pool. The real scandal here is the bonuses guys at Pimco were paying themselves for mediocre performance.

Pimco’s flagship Total Return Fund performed poorly previous year and many investors withdrew funds, with assets falling below $100bn after peaking at close to $300bn in April 2013. Now, he wants to expose “improper, dishonest, and unethical behavior”‘.

On the surface PIMCO management tried to appear to be even handed, but in reality an agenda started to emerge, Gross charged. “Traders and investment bankers often lodge them against their former employers”, Elzweig explained. The complaint [makes it look like PIMCO executives had] a calculated plan to not pay an earned bonus. However, he was accused of leading the company in an erratic manner in recent years.

After a protracted fight, El-Erian left Pimco in 2014 in what became a very public departure.

Ivascyn and his allies told PIMCO it’s Gross or us, according to the complaint. He downplayed El-Erian’s success running Harvard University’s endowment fund, noting it came during the “bubble” of the mid-2000s.

As a result, El-Erian abruptly announced his resignation from the posts of co-Chief Investment Officer and co-Chief Executive Officer of PIMCO and voiced his intent to leave the company entirely, which he did shortly thereafter.

Gross is looking for damages of at least $200 million for forcing him out of the company, according to court filings. Gross claims Andrew Balls, a Pimco senior executive, called reporters on behalf of El-Erian via a “little-used cell phone”.

What I like here is the image that Gross “is informed and believes” that 100 people whose “true names and capacities are unknown” to him conspired against him.

Gross is referred to in the complaint as “a world-renowned investor” with a “towering reputation”. It begins, for example, by slamming Mohamed El-Erian, Gross’s one-time heir apparent, as an irresponsible investor who was first blind to, and then overcome by, the risk he took on.

Gross, through a spokesman, declined to comment.

The spokeswoman for Allianz said the company learned about the complaint via media reports, and that Gross terminated his position at Pimco and immediately moved to a competitor.

In the suit, which is now available online, the fixed-income expert says he was wronged and deserves compensation.