Star bond fund manager Jeffrey Gundlach fired back at his former employer, Trust Company of the West, on Monday, saying the firm had smeared him in a lawsuit it filed last week.

TCW's lawsuit will be handled as a business dispute in the ordinary course and will not distract Gundlach from expanding his new firm, DoubleLine Capital LP, Gundlach said in a letter to clients that was obtained by Reuters.

While I am resolved not to let TCW distract me or my team, TCW has disseminated certain smears and innuendoes that I am unwilling to let pass, Gundlach wrote in the letter.

In the letter, Gundlach did not deny TCW's allegations that marijuana and pornography were found in his former offices. Instead, he accused TCW of invading his privacy and revealing vestiges of closed chapters of my life.

In the lawsuit, filed on January 8 in California Superior Court, TCW accused Gundlach of stealing confidential data, lying to potential clients and keeping drugs and pornographic materials in his office.

The high-stakes back and forth comes as TCW, a unit of French Bank Societe Generale , and Gundlach battle over tens of billions of dollars of client assets. Gundlach oversaw about $65 billion of TCW's $110 billion of assets under management before he was fired.

Los Angeles-based TCW fired Gundlach on December 4, saying he had threatened to take actions that would have jeopardized the firm's ability to manage client assets.

A spokeswoman for TCW said the lawsuit answered Gundlach's latest comments. We think Mr. Gundlach's letter and the facts of the complaint speak for themselves, the spokeswoman said.

In his letter, Gundlach defended his actions to plan for possibly leaving TCW before he was fired. He noted that SocGen had announced plans in January 2009 possibly to divest its money management businesses including TCW.

Gundlach said he had explored avenues to purchase the business, overtures that were rebuffed.

Gundlach wrote that he also fully expected up until my dismissal on December 4 that, if I left TCW, I would do so in a negotiated transaction that was accommodative to clients as well as mutually beneficial for TCW and myself.

SocGen has repeatedly said that Gundlach never presented an offer for TCW that was formal or realistic.

Regarding allegations of marijuana and pornography found after he was fired, Gundlach wrote that TCW opened locked drawers in his former Los Angeles office and searched a small personal office in Santa Monica where he paid the rent.

While these actions will no doubt be subjects of litigation, suffice it to say that I had every expectation of privacy in these spaces, which stored vestiges of closed chapters of my life, he wrote.

(Reporting by Aaron Pressman. Editing by Richard Chang and Steve Orlofsky)

Investment Lawsuit