Jury Awards Gundlach $66.7 Million in Bitter Fight With TCW

(September 16, 2011) — Bond guru Jeffrey Gundlach has been awarded $66.7 million by a jury over unpaid wages following his split from money management firm Trust Company of the West.

A Los Angeles jury awarded TCW, a unit of French bank Societe Generale, no punitive damages. However, it found that Gundlach and his co-defendants breached their fiduciary duty to the firm by taking trade secrets. The bond star was also found liable for interfering with TCW client contracts.

The jury awarded Gundlach the millions of dollars in unpaid wages to be split among Gundlach and three other former TCW executives. In December 2009, Gundlach and the three executives — who joined Gundlach’s new firm, DoubleLine Capital — were fired from TCW. DoubleLine has attracted about $14 billion from investors in 20 months.

In response to the verdict, TCW stated:

“We are gratified by the jury’s verdict, which speaks directly to the principles at the heart of this case — integrity, honesty and trust. The jury found that each of the defendants violated these principles — that each one of them breached their fiduciary duties and stole trade secrets and that Jeffrey Gundlach wrongfully and intentionally interfered with TCW’s business…Trade secret damages to TCW will be determined in a separate proceeding. The jury has made it clear that the principles of integrity, honesty and trust count.”

Last month, Gundlach told a Los Angeles jury that during a meeting with TCW Chief Executive Officer Marc Stern when he believed he was about to get fired, he offered roughly $350 million for 51% of the firm. “If you fire me, you’re going to blow up the firm,” Gundlach told Stern during the meeting, according to Bloomberg.  

While TCW claimed Gundlach stole its trade secrets, including client portfolio data, to start DoubleLine, Gundlach had countersued TCW and its parent firm. Seeking about $500 million, he accused the firm of firing him to avoid paying him a hefty chunk of promised income, and said that concerns over being fired drove him to develop a backup plan to start his own money management firm.