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Thursday, August 18, 2011|
Why Did Robert Day Fire Gundlach?
Jeff Gundlach ended his four-day testimony yesterday in his courtroom battle with his former employer, TCW [see profile]. And a top Gundlach lieutenant at DoubleLine [see profile] related an interesting conversation with TCW founder and chairman Robert Day. Meanwhile, TCW CEO Marc Stern could testify today.
To read the rest of the story of the fight between Gundlach and TCW, click here.
Bloomberg, Business Insider, the Los Angeles Times (thrice: here, here and here), Mogulite, the New York Times, Pensions & Investments and Reuters (twice: here and here) all covered the trial yesterday.
Gundlach's final day in the witness box including an argument with TCW's lead attorney in the case, John Quinn, over the performance of DoubleLine's flagship Total Return Bond Fund. Quinn asked about Gundlach's connection to collateralized debate obligations that TCW managed, and he suggested that Gundlach's fund's strong performance comes from being "turbocharged," i.e. taking on excessive amounts of risk [see Bloomberg clip].
"With respect, you don't know what you're talking about," Gundlach told Quinn.
Separately, Los Angeles Superior Court Judge Carl West, who's presiding over the case, chastised Gundlach and two jurors from the trial for talking to each other in a courthouse elevator. The first juror claims he said he felt bad for the second juror; Gundlach testified that he thought the remark was directed at him and he responded by saying "I feel bad for you guys."
After Gundlach finished, DoubleLine president Philip Barach, who was Gundlach's number two at TCW, testified that TCW founder Day revealed three reasons for firing Gundlach just minutes after it was done. According to Barach, Day said Gundlach made "way too much money" ($40 million in 2009), failed to anticipate the stock market's bottom in March 2009, and didn't attend Day's staff parties.
Gundlach's cross-claim accuses TCW of firing him to avoid shelling out hundreds of millions of dollars in fees.
Also yesterday, jurors saw a video of the deposition of Gregory Ward, former vice president in institutional marketing at TCW and former chief financial officer at DoubleLine. Gundlach had testified that Ward approached him about setting up a asset manager, yet Ward testified that Gundlach came to him in September or October 2009 -- TCW fired Gundlach in December 2009. Ward said he expected Gundlach to start negotiating a departure from TCW in January 2010.
Printed from: MFWire.com/story.asp?s=37604
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