A verdict in Los Angeles Superior Court Friday has conjured up a shared happy ending between DoubleLine Capital CEO Jeffrey Gundlach and his former employer The TCW Group after more than two years of legal wrangling.
According to local reports, Gundlach was ruled as liable for breaching his fiduciary duty after TCW terminated him Dec. 4, 2009, but with no hint of malice. This stipulation prevents the Société Générale subsidiary from receiving any financial compensation, the Los Angeles Times reported this afternoon.
Meanwhile, the jurors’ verdict indicated that Gundlach “misappropriated the company’s trade secrets” when he established his new firm in 2009, the publication said.
Furthermore, it will be decided at a later time as to how much the former TCW high yield fixed-income CIO will have to pay in damages. Superior Court Judge Carl West is scheduled to decide the matter.
However, in a win for Gundlach, the jury did find that TCW owes $66.7 million to the 24-year firm veteran and other employees for failing to pay out wages before they departed for Los Angeles-based DoubleLine Capital, Peter Viles, managing director and head of corporate communications for TCW, confirmed to ASR sister publication Investment Management Mandate Pipeline.
Michael Cahill, TCW general counsel, said in a prepared statement Friday that the firm is “gratified by the jury's verdict, which speaks directly to the principles at the heart of this case.”
“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,” he explained.
Attempts to gain comment from DoubleLine Capital spokesperson Lew Phelps regarding the ruling were not immediately returned.
The six-week long civil trial, which was to decide allegations made in early 2010 by the two parties, first began in early August.
Initially, in January 2010, TCW alleged in the complaint that DoubleLine was “not a testament to [Gundlach and DoubleLine’s] supposed acumen but the product of their secret theft [of TCW’s proprietary information].”
Roughly a month later, DoubleLine’s cross-complaint alleged that the Los Angeles-based TCW owed him “easily…$1.25 billion and beyond” due to a previous “early 2007…oral agreement” for performance compensation for investment products his team managed. The complaint explained that TCW used this as “pretextual basis” to fire him and repudiate its fee obligation.
“[TCW] hatched a scheme to deprive Gundlach and his group of this lucrative compensation package and to confiscate the huge future fees that would be generated as a result of the skill and hard work of Gundlach and his group,” the cross-complaint claimed at the time.