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Rating:Three Days After It Began, a Pimco Wrongful Termination Suit Ends Not Rated 0.0 Email Routing List Email & Route  Print Print
Wednesday, March 13, 2013

Three Days After It Began, a Pimco Wrongful Termination Suit Ends

Reported by Tommy Fernandez

A former PM who filed a wrongful termination suit against Pimco [profile] last week withdrew the suit only three days later.

In the complaint for Williams V. PIMCO, Case No.: 30-2013-00635253-CU-WT-CJC, Jason Williams, 36, a former PM in PIMCO's high yield group, alleged that the asset manager had wrongfully terminated him and violated Title 8 California Code of Regulations Section 11050 [see the complaint].

The language of the allegations below are taken directly from the complaint filed on March 5:
In October of 2000, Defendants hired Williams. Defendants employed him at various times as an operations associate and as a trading assistant to work from its headquarters in Newport Beach, CA. In May of 2005, Defendants promoted Williams to a portfolio manager position in its High Yield group. Defendants were at all times satisfied with his work performance and even proposed that he mentor less experienced portfolio managers.

6. Beginning in mid-2008, Williams noticed, documented, objected to and reported to Defendants' management, compliance officers and his supervisors, including Chris Dialynas, misconduct involving senior managers. Such misconduct included the following:

a. In December of 2008, a senior manager directed Williams to arbitrarily elevate the rating a PIMCO analyst had assigned to a bond in order to place the bond in funds that had a higher rating requirement;

b. In April of 2009, a senior manager stated on a television program that he was extremely optimistic about Bank of America credit while PIMCO was simultaneously aggressively selling Bank of America convertible preferred securities;

c. In 2008, market manipulation and breach of fiduciary duty to PIMCO clients in connection with a convertible preferred security, issued in the primary market, in which a senior manager allocated away from other PIMCO clients after the equity market had opened and the convertible preferred was trading up around l0% in the secondary market;

d. In August of 2008, senior management intentionally violated PIMCO prospectus for a Convertible Bond Fund;

e. In August of 2008, breach of fiduciary duty to client by ignoring client request to purchase a significant position in a PIMCO Convertible Bond Fund;

f. Between or around late 2008 and early 2009, senior management directed the intemal transfer of illiquid securities, securities that had been arbitrarily overvalued, from the PIMCO PARS hedge fund to other PIMCO funds, to the detriment of the holders of the receiving funds:

g. In or around late November or early December, 2008, attempted unlawful trading on inside information involving stock in El Paso Corporation;

h. In or around January of 2012, short-selling a High Yield CDX 17 to the disadvantage of other PIMCO clients who did not receive their pro rata share of their allocation which had been the standard for the previous month plus; and

i. In or around March of 2012, artificial manipulation of the price a PIMCO Total Return Fund, an exchange traded fund.

7. In response to Williams's objections, Defendants' managers arbitrarily reduced Williams's compensation and subjected him to verbal abuse.

8. In December of 2011, Williams reported the conduct described above to Special Agent Norman Embry and two other special agents of the U.S. Department of the Treasury Office of the Special Inspector General for the Troubled Asset Relief Program ("SIGTARP").

9. On February 17,2012, Williams notified Robin Nabors, a Defendants' Human Resources representative, of his complaints to SIGTARP and his cooperation in the agency's investigation. Soon after, Williams notified PIMCO's counsel of his communication with federal agents.

10. On March 6,2012, approximately three weeks after Williams notified Defendants of his complaints to the federal agents, Defendants terminated his employment because of his disclosures to a federal law enforcement agency and for his cooperation in the investigation that arose from it. The individuals who terminated Williams's employment were aware of his complaints of Labor Code violations outlined above. As a pretext, Defendants advised Williams that he was terminated for "performance reasons" even though his work performance had been satisfactory.

Yet three days after filing his lawsuit, Williams filed a request to dismiss the case, without prejudice. Williams was represented in his suit by David Spivak of the Spivak Law Firm. MFWire could not immediately reach Spivak for comment on the case. A spokesman for Pimco told MFWire that the bond mutual fund titan doesn't comment on legal matters "as a matter of policy."

"However, PIMCO performs an appropriate review of all employee complaints or concerns," the Pimco spokesman said in an e-mailed statement.

According to the New York Times, two sources with direct knowledge of the matter said that Williams and his lawyers are representatives for Pimco "are engaged in talks related to resolving the dispute." 

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