Trust Company of the West (TCW [see profile]
) CEO Marc Stern
predicted three months in advance of firing Jeff Gundlach
that the chief investment officer would "part ways" with TCW, and Stern even secretly met in Paris with executives from TCW parent Societe Generale
to discuss the plan to get rid of Gundlach two months in advance. Those pieces of the story came to light yesterday in court in Los Angeles, in the fight between TCW on one side and Gundlach (now CEO of DoubleLine [see profile]
) on the other.
To read the rest of the story of the fight between Gundlach and TCW, click here.
, Pensions & Investments
all reported on Stern's testimony yesterday.
"The element of surprise was essential to the preservation of the company," Stern reportedly said to explain the secrecy surrounding "Project G," the plan to eliminate Gundlach, adding that he feared letting the secret out would create a "self-fulfilling prophesy."
The suit and counter-suit hinge on the one side on TCW's claims that Gundlach and his colleagues swiped trade secrets to start up DoubleLine, and on the other on Gundlach's claims that TCW dumped him to avoid shelling out hundreds of millions of dollars to his team.
Stern confirmed that he hid an October 2009 meeting with SocGen to talk about firing Gundlach. And jurors also saw a September 7, 2009 e-mail where Stern predicted that TCW and Gundlach would soon have to "part ways." At a meeting four days prior to that e-mail, Stern assured Gundlach that TCW wasn't firing Gundlach. TCW fired Gundlach three months later.
Also yesterday, TCW's Duke Heger
claimed that, thanks to fee cuts clients demanded after Gundlach talked with them after his departure from TCW, TCW earned only $20 million in management fees and and $50 million in performance fees in 2010 on certain closed-end funds, compared to the $56 million and $367 million clients would've paid otherwise. Yet Heger confirmed that those fees would've gone to TCW subsidiaries TCW Asset Management Co. and TCW Special Mortgage Credits Fund II LLC, not TCW itself, and the judge ruled on July 21 that TCW could not amend its complaint to add those two subsidiaries.
Neil Anderson, Managing Editor
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