Gundlach: Stern tried to divide and conquer firm
TCW's incoming CEO in 2009, Marc Stern, tried to sow discord and drive a wedge between Jeffrey Gundlach and his tight-knit mortgage-backed securities team, Gundlach testified on Thursday.
The star bond manager was worried that Stern, slated to take over TCW on an interim basis from June 1, 2009, would try to sideline him by recruiting his No. 2, Philip Barach, to head the team instead, Gundlach testified in court.
They are trying to mount a counter-offensive, Gundlach, once called the king of bonds, wrote in a May 29 email showed to the court. The war is on.
I was concerned that he (Stern) was acting in a way that was writing me off and trying to push me out of the firm, the outspoken manager told jurors on Thursday. It seemed like they were dividing and conquering.
Gundlach and TCW are locked in a high-stakes trial with hundreds of millions of dollars on the line, and which has given a rare glimpse into the inner workings of asset management firms and the personalities that run them.
Gundlach, the industry's self-styled Pope and Godfather, took the stand on Thursday afternoon and answered questions in a matter-of-fact tone. At times he offered lengthy explanations to the questioning before the judge told him to stop.
TCW fired Gundlach in late 2009 and sued him a month later, accusing him of stealing trade secrets, plotting to form a new company using TCW proprietary information, and gutting the firm of its entire mortgage-backed securities team.
Gundlach fired back with a counter-lawsuit, alleging that his former employer owed him hundreds of millions of dollars in back wages.
In the weeks following his termination, Gundlach formed his own asset management company, DoubleLine Capital, along with three of his co-defendants in the case.
Before Gundlach took the stand, jurors were shown a taped video deposition in which Gundlach said he never told anyone on his staff to download data from TCW or copy valuable trading information -- though he did briefly consider such an action.
That stuff wouldn't do us any good anyway, the bond manager said in a video deposition played in court on Thursday. There was never an instruction to do anything.
Gundlach watched his video deposition -- in which he laughingly answered questions -- with a stone face.
Cris Santa Ana, a co-defendant and key ally of Gundlach, testified earlier in the trial that Gundlach ordered him to begin downloading TCW information in early September 2009.
Gundlach said in the deposition that he was very, very angry upon hearing that he might be fired that month.
If they're going to fire me, we should have a list of how to call our clients, and maybe their legal documents, he recalled saying on the trading floor.
However, Gundlach said in the video that he rejected the idea about thirty seconds later, and nothing like that ever happened again.
I loved TCW, Gundlach told jurors. I wasn't going anywhere.
Gundlach will take the stand again on Monday.
TCW is a unit of French bank Societe Generale.
The case in Superior Court of California, County of Los Angeles, is Trust Co of the West v. Jeffrey Gundlach et al, BC429385.
(Reporting by Mary Slosson; Editing by Gerald E. McCormick, Bernard Orr, Phil Berlowitz)
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