DoubleLine Capital, the brainchild of portfolio manager Jeffrey Gundlach, revealed in a Securities and Exchange Commission (SEC) filing Monday that “employees and former employees” have been questioned by federal investigators. 

The SEC filing, which is a prospectus offered for its total return bond, core fixed-income, and emerging markets fixed-income funds, stated in its “Litigation and Investigation Risk” section that staff “have been interviewed by representatives of the Special Inspector General of the Troubled Asset Relief Program, and by the office of the United States Attorney for the Southern District of New York.”


Interviews were said to be in connection with the U.S. Treasury’s Public Private Investment Program (PPIP) and prior allegations of “misappropriation of proprietary information made by the Trust Co. of the West in part of its federal grand jury inquiry.”

The Dec. 6 filing also stated that the firm “has cooperated with the inquiry and has voluntarily produced documents.”

Previously, the Trust Co., which is also known as The TCW Group, moved to fire Gundlach in early December 2009. Days later, Gundlach announced the creation of his own firm, and proved to take executive personnel with him from the Los Angeles-based firm.

As a result of the bitter break-up, the Société Générale subsidiary filed suit at the start of the year, which stated that Gundlach and his new institution breached their fiduciary duty, which caused unfair competition and hurt TCW.

Alternately, in between the time of his firing and the launch of DoubleLine, the Treasury Department also confirmed to IMW that it had froze the PPIP funds that TCW was in charge of due to the Gundlach firing.

Reasons for the decision came as a result of “Key Person Event” which is a result of change of the investment management of the fund. Gundlach was previously put in place to advise TCW’s UST/TCW Senior Mortgage Securities Fund valued at roughly $500 million. It initially closed on Sept. 30, 2009.

In January, the investment management firm opted to withdraw from the federal program because it believed “this action is appropriate and in-line with TCW’s commitment to act in the best interests of [its] clients,” CEO Marc Stern said at the time.

As of press time today, inquires placed to Peter Viles, senior vice president of corporate communications at TCW, seeking comment and further information on the inquiry were not immediately returned.

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