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8/20/2019 Bill Gross complaint
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PATRICIA
.
GLASER S t a t e Bar No. 5668
p g l a s e r ~ ~ l a s e r w e i l
om
G.
JILL BASINGER
S t a t e
Bax
No. 195739
j
a s i n g e r @ g l a s e r w e i l .
com
RORY
.
MILLER
State
Bar
No.
23 780
r m i l l e r ~ ~ l a s e r w e i l
om
GLASER
WEIL
FINK
HOWARD
AVCHEN
HAPIRO
LLP
10250
o n s t e l l a t i o n
Boulevard,
9 t h F l o o r
Los Angeles,
a l i f o r n i a
90067
Telephone: 310) 53-3000
F a c s i m i l e :
310)
56-2920
A t t o r n e y s
f o r P l a i n t i f f
William H.
Gross
SUPERIOR
COURT OF THE
STATE
OF
CALIFORNIA
FORTHECOUNTYOFORANGE
WILLIAM
H.
GROSS n
n d i v i d u a l
P l a i n t i f f
v .
PACIFIC
INVESTMENTMANAGEMENT
COMPANY
LLC Delaware
l i m i t e d
l i a b i l i t y
company,
ALLIANZ ASSET
MANAGEMENT
OF AMERICA
. P .
a
Delaware
l i m i t e d
p a r t n e r s h i p
and
DOES
- 1 0 0 n c l u s i v e
Defendants.
Case No.
U n l i m i t e d
J u r i s d i c t i o n
COMPLAINTFOR:
1)
CONSTRUCTIVE
TERMINATION
2)
BREACH
OF
CONTRACT
3)
BREACH
OF
COVENANT
OF
GOOD
FAITH
AND FAIR
DEALING
JURYTRIAL
DEMANDED
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INTRODUCTION
1 . Driven by a u s t f o r power, r e e d , and
a d e s i r e t o improve t h e i r
own i n a n c i a l
p o s i t i o n
and
r e p u t a t i o n
a t
t h e
expense of
n v e s t o r s and
decency, a
a b a l
of a c i f i c
Investment
Management Com pany
LLC
PIMCO )
anaging
d i r e c t o r s p l o t t e d t o
d r i v e founder B i l l Gross
ou
ofPIMCO
n
o r d e r
t o t a k e ,
without compensation, r o s s ' s
p e r c e n t a g e ownership i n
t h e
p r o f i t a b i l i t
of
PIMCO.
h e i r
improper, i s h o n e s t , and
u n e t h i c a l
b e h a v i o r m u s t
n o w be
exposed.
2 .
P l a i n t i f f
B i l l Gross founded
d e f e n d a n t PIMCO
ver 40
e a r s
ago
and
has been
i n t i m a t e l y
connected w i t h i t s investment c t i v i t i e s s i n c e t h a t
t i m e .
As
a
founder and s e n i o r
e x e c u t i v e ,
as
w e l l
a s
aworld-renowned
i n v e s t o r ,
Mr .
Gross
e c e i v e d s u b s t a n t i a l
i n come a s
PIMCO
grew
and e s t a b l i s h e d i t s e l f
a s on e
of
h e
l e a d i n g
f i x e d
i n come s e c u r i t y
investment i r m s
i n
t h e
world.
3 .
Mr. r o s s ' s
ongoing
s u c c e s s a t PIMCO
roved t o
be
h i s undoing.
In
t h e
mi nds
of
c e r t a i n younger
e x e c u t i v e s a t
PIMCO,
r .
r o s s ' s
ongoing
p r e s e n c e
a t t h e c o m p a ny
checked
t h e i r
o v u m
f i n a n c i a l and
c a r e e r
a m b i t i o n s . Unde r
PIMCO's
p r o f i t - s h a r i n g
p l a n Mr .
Gross
was n t i t l e d
t o
r e c e i v e 20 f
h e
e n t i r e
p r o f i t
s h a x i n g
bonus pool
each y e a r .
By o r c i n g
h i m
out of
PIMCO, h e
younger
e x e c u t i v e s
would
s p l i t Mr . r o s s ' s s h a r e of h e bonus pool
amongst
h e m s e l v e s .
4 .
In a d d i t i o n t o r e c e i v i n g compensation
c o n s i s t e n t w i t h
h i s s k i l l
and r e p u t a t i o n ,
Mr .
Gross
was
l s o well-known
as
an
a d v o c a t e
f o r
PIMCO's n v e s t o r s . He
hampioned
r e a s o n a b l e
f e e
f o r
PIMCO's e r v i c e s
and
wa s
v o c a l l y s k e p t i c a l i n s i d e
t h e f i r m of a
e l e c t group
of h e
younger
e x e c u t i v e s '
d e s i r e
t o
t r a n s f o r m
PIMCO n t o
a h i g h - r i s k ,
high
- f e e a s s e t
-management
c o m p a ny
h a t
i n v e s t e d
i n r i s k i e r
e q u i t i e s and l e v e r a g e d r e a l e s t a t e
i n v e s t m e n t s ,
a s
opposed
t o
t h e s t a b l e
bonds
h a
b u i l t t h e
f i r m ' s
r e p u t a t i o n .
5 .
As
ong
a s
M r .
Gross remained a t
t h e
c o m p a ny
h e
founded,
h e s e
younger
e x e c u t i v e
were
unable t o
t r a n s f o r m
PIMCO, n c r e a s i n g c l i e n t r i s k
and
h e i r
own
ompensation.
As
consequence, Mr . Gross
became h e t a x g e t of a
powe r t r u g g l e
w i t h i n
PIMCO
a
t r u g g l e
t h a t
e v e n t u a l l y l e d t o
h i s
wrongful and i l l e g a l
o u s t e r from t h e c o m p a ny h e
founded
and
a
t r u g g l e
w her
PIMCO v ~ r o n g l y
and
i l l e g a l l y
d e n i e d Mr .
Gross
hundreds of
i l l i o n s
of
o l l a x s
i n
e a r n e d
compensation.
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THE
ARTIES
6 .
P l a i n t i f f
William
H. Gross s
aworld-renowned
i n v e s t m e n t
manager
o c u s i n g
o n
bonds and o t h e r
f i x e d income s e c u r i t i e s . Over h i s
n e a r l y
5 0 y e a r s
i n
t h e
i n d u s t r y ,
Mr.
Gross has
developed
a
towering
r e p u t a t i o n t h a t
h a s ,
a m o n g
o t h e r
t h i n g s ,
e d
t o
h i m
being
c a l l e d
t h e
Bond
King
by h e f i n a n c i a l
media.
At
l l r e l e v a n t t i m e s ,
Mr.
Gross w a s a e s i d e n t o f
Orange
County,
C a l i f o r n i a .
7 .
Defendant PIMCO
s
a
Delaware i m i t e d
l i a b i l i t y c o m p a ny w i t h
a r i n c i p a l
p l a c e of
b u s i n e s s a t 650 New p o r t
e n t e r
D r i v e , N e v v ~ p o r t
Beach,
a l i f o r n i a .
8 .
Defendant
A l l i a n z
Asset
M an ag e m e n t
of
America L . P .
i s
a
Delaware
l i m i t e d
p a r t n e r s h i p
w i t h
a
p r i n c i p a l
p l a c e
of
u s i n e s s a t
6$0
Newport
e n t e r Drive,
New p o r t
Beach,
C a l i f o r n i a .
9 .
Defendants D oe s
1 through
100, n c l u s i v e , a r e
sued
h e r e i n
under
i c t i t i o u s
names.
T h e i r t r u e
n a m e s and c a p a c i t i e s a x e
unknov~m
t o
P l a i n t i f f .
When h e i r t r u e
n a m e s
and c a p a c i t i e s
a r e
a s c e r t a i n e d , P l a i n t i f f w i l l
a m e n d h i s complaint by n s e r t i n g t h e i r t r u e
n a m e s and
c a p a c i t i e s h e r e i n .
P l a i n t i f f s
informed
and b e l i e v e s , and
o n
h a t
b a s i s a l l e g e s ,
t h a t
each of
h e f i c t i t i o u s l y
n a m e d
d e f e n d a n t s
i s
t h e a g e n t , s e r v a n t ,
employee, e p r e s e n t a t i v e ,
p a r t n e r ,
and j
i n t - v e n t u r e r
of h e i r
co-
d e f e n d a n t s , and
i n
doing t h e
t h i n g s
h e r e i n a l l e g e d
w a s
c t i n g
w i t h i n
t h e
c o u r s e
and
scope of
uch
agency, employment,
e p r es e n t a t i o n , p a r t n e r s h i p , and
j i n t
v e n t u r e w i t h
t h e knowledge,
e r m i s s i o n
and
consent
of
h e i r
c o - d e f e n d a n t s , and
so
r a t i f i e d l l of h e i r a c t s
and c o n d u c t .
T h e r e f o r e , each D o
Defendant
s
r e s p o n s i b l e
i n
s o m e manner o r
t h e o c c u r r e n c e s
h e r e i n
a l l e g e d ,
and
P l a i n t i f f
amage
a s h e r e i n a l l e g e d were p r o x i m a t e l y
caused by
a i d
d e f e n d a n t s .
1 0 . At
l l
r e l e v a n t
t i m e s ,
each
Defendant w a s h e agent of
h e
o t h e r
Defendants and
w a s
a t
l l
times
a c t i n g
w i t h i n
t h e
purpose
and
scope
o f
such agency.
Moreover,
n
committing
t h e
a c t s
and
omissions
a s s e r t e d h e r e i n ,
Defendants,
and each of hem,
were
a c t i n g
i n
c o n c e r t t o g e t h e r , n
t h e
c o u r s e
and
scope o f h e i r r e s p e c t i v e r e l a t i o n s h i p w i t h
each
o t h e r ,
whether
as
employees,
g e n t s ,
r e p r e s e n t a t i v e s , independent c o n t r a c t o r s ,
p r o v i d e r s , s e r v i c e
p r o v i d e r s , a s
a g e n t s o r
r e p r e s e n t a t i v e s o
each
o t h e r , r e s p e c t i v e l y , o r
a s o i n t
v e n t u r e r s ,
c o - c o n s p i r a t o r s or
o t h e r w i s e .
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FACTUALBACKGROUND
ANDGENERAL
ALLEGATIONS
A.
Mr.
ross Founds
PIMCO
1 1 .
Mr. ross r a d u a t e d
with a degree
n
psychology
from
Duke
n i v e r s i t y i n
1966.
1 2 . A f t e r g r a d u a t i o n
and
a
o l o r f u l
p e r i o d
i n
which,
mong t h e r a c t i v i t i e s , Mr.
ross
was
a
r o f e s s i o n a l b l a c k j a c k
p l a y e r ,
Mr. ross w a s
ommissioned
a s
an Ensign n
t h e
United t a t e s
Navy
and,
rom 1966
o 1969, e r v e d
i n
Vietnam
aboard
a e s t r o y e r .
Following i s
r e t u r n
from
Asia,
e n r o l l e d
i n t h e Anderson
School of Management t
UCLA nd
earned an MB e g r e e i n
1971.
1 3 .
Subsequent o
e a r n i n g h i s
MBA r.
ross ook
i s
f i r s t p o s i t i o n i n t h e
f i n a n c i a l
i n d u s t r y
w h e n
h e
was
i r e d
as
an
s s i s t a n t
v i c e
p r e s i d e n t
f o r
f i x e d
income
e c u r i t i e s a t P a c i f i c
Mutual
i f e I n s u r a n c e
Company. Along
with
t w o
of i s
c o l l e a g u e s
a t P a c i f i c
Mutual,
ames Muzz
and William o d l i c h , Mr. ross
founded a n e w
nvestment
management i v i s i o n
a t
t h e
company n
1971.
Over
i m e ,
t h i s
d i v i s i o n
would
grow n t o PIMCO.
1 4 . Mr.
ross
o n t i n u e d t o develop i s
s k i l l s
w h i l e
a t P a c i f i c Mutual
and
PIMCO.
n
1976,
e
e c e i v e d
h i s
C e r t i f i e d
F i n a n c i a l Analyst r e d e n t i a l s , a l o n g w i t h g a r n e r i n g
more
and
more
r e c o g n i t i o n
b o t h w i t h i n
t h e investment
management ommunity and
n
t h e b r o a d e r b u s i n e s s
w o r l d .
1 5 . Under Mr.
r o s s ' s
l e a d e r s h i p ,
PIMCO
n t r o d u c e d
a e v o l u t i o n
i n
t h e
i n v e s t m e n t
world:
a c t i v e l y
managed b ond o r t f o l i o s .
P r i o r
t o
Mr.
r o s s ' s
e f f o r t s a t
PIMCO ond
o r t f o l i o s
w ere
t a i d i n v e s t m e n t
p r o d u c t s ,
t y p i c a l l y
purchased
a t i s s u e and h e l d u n t i l m a t u r i t y .
Mr. ross and
h i s c o l l e a g u e s ,
however,
aw
h e o p p o r t u n i t y t o
i n c r e a s e
r e t u r n s
f o r
i n v e s t o r s through
a r e f u l
s e l e c t i o n ,
buying, e l l i n g
and
r a d i n g
of
onds.
I n
f a c t , Mr. ross was n s t r u m e n t a l
i n
d e v e l o p i n g
n e w models
o r
t h e
c r e a t i o n
of
i n a n c i a l index o r bond
m a r k e t s ,
and
w a s ven
a named
n v e n t o r
on
a
United
t a t e s
p a t e n t
based
on
h a t
work.
1 6 . Over h e next e c a d e s , Mr.
ross b e c a m e one
of
h e
foremost
u t h o r i t i e s on h e
bon
markets
and
aworld-famous investment
manager.
1 7 .
Mr.
r o s s ' s
investment
u c c e s s i s based
n l a r g e
p a r t
upon
i s p e r s o n a l
p h i l o s o p h y
r e g a r d i n g
i n v e s t m e n t s .
Mr.
ross o c u s e s on
e v e l o p i n g a
s e c u l a x
i . . ,
l o n g - t e r m ) o u t l o o k f o r
t h
maxket and h e n
s t r u c t u r i n g
h i s
i n v e s t m e n t p o r t f o l i o
a c c o r d i n g l y . Mr.
ross
e l i e v e s
t h a t
doing
so
3
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a l l o w s
an n v e s t o r
t o
focus
o n long term
market
r e n d s and a v o i d g e t t i n g
caught u p
n
emotional
r e s p o n s e s
t o
i r r a t i o n a l
o c c u r r e n c e s
i n
t h e m a r k e t . On e example
o f
h i s
p h i l o s o p h y i n a c t i o n
was
Mr
Gross
and
PIMCO
o i n i n g and
p o p u l a r i z i n g
t h e p h r a s e the n e w normal
o d e s c r i b e
a e r i o d o f
time
where
h e r e
was
i t t l e
t o
no
e c o n o m i c growth
i n t h e
world
e c ono my.
1 8 . This n v e s t m e n t s t r a t e g y ,
and Mr.
r o s s s
sk ill
a t implementing t ,
l e d t o
phenomena
r e s u l t s
f o r
PIMCO,
r .
Gross, and, m o s t
m p o r t a n t l y ,
h e
c l i e n t s
w h o
n t r u s t e d Mr.
Gross
w i t h
t h e
m a n a g e m e n t
o f
h e i r m oney.
F r o m
h e
1980s
through h e
2000s,
Mr.
G ross
a c h i e v e d r e t u r n s a t o r
n e a r
double d i g i t s ,
which
a r e
t y p i c a l l y
only seen
i n t h e
f a x r i s k i e r
e q u i t i e s
m a x k e t s . Under i s
g u i d a n c e ,
PIMCO
rew d r a m a t i c a l l y and went u b l i c
o n
h e
New o r k
Stock Exchange
n
1994.
1 9 . In
1996,
Mr. Gross was h e f i r s t p o r t f o l i o
manager
n d u c t e d
i n t o t h e
Fixed- In come
Analyst S o c i e t y H a l l o f
Fa m e
o r
h i s major
c o n t r i b u t i o n s
t o t h e advancement
o f
ond and
p o r t f o l i o
a n a l y s i s .
Mr.
Gross was l s o
n a m e d
M o r n i n g s t a r
Fixed I n c o m e Manager o f
h e Year h r e e
s e p a r a t e
t i m e s ,
n
1998,2000 and 2007. This
s t u n n i n g
performance
i n
both b u l l and b e a x
markets
l e d Mr .
Gross
o being
nam e d
Morningstar
Fund
Manager
o f
h e De cade
2000-2009.
20.
When r .
Gross
and h i s c o l l e a g u e s
founded
PIMCO,
t had $12
i l l i o n i n
a s s e t s .
By 013,
t
t h e
peak
o f PIMCO's i z e and
l a r g e l y due
o
Mr.
r o s s s
r e p u t a t i o n
and
r a c k
r e c o r d , h
and
PIMCO ere
managing n e a r l y $2 r i l l i o n i n
a s s e t s ,
and
h i s
f l a g s h i p
T o t a l
Return
Fund was
h e
w o r l d s l a r g e s t mutual fund, with n e a x l y
$300
i l l i o n i n
a s s e t s .
B.
Mr. r o s s and
PIMC4 s
uccession Plan
E f f o r t s
F a i l
Due o
E1-Erian
21. By 007,
Mr.
Gross had been p a r t o f
PIMCO
o r 35
y e a x s
and had b e g un
o
c o n s i d e r
s u c c e s s i o n p l a n s , a s he
was
n
h i s s i x t i e s . B i l l T h o m p s o n , hen-Chief
Executive O f f i c e r o f
PIMCO,
was
o f a i m i l a r a g e , and
a l s o
l o o k i n g
t o
p l a n
f o r
an
o r d e r l y
t r a n s i t i o n f r o m
PIMCO. h e p a i r
bega
t o
seek a
s u c c e s s o r ,
whom
hey
b e l i e v e d
t h a t
they
had
found
i n
a
former
PIMCO
mployee,
Mohamed
l - E r i a n .
22. F r o m
1999
o
2006,
l - E r i a n had
been
PIMCO's
head o f
m e r g ing
Markets.
He
a
c o m e
o
PIMCO i t h
an
m p r e s s i v e
resume h a t
b o a s t e d a decade and a a l f a t t h e
I n t e r n a t i o n a l
Monetary
Fund and a
t i n t
a t
C i t i g r o u p i n
London.
In
2006,
1 - E r i a n
had
l e f t PIMCO
n
g o o d
terms
n o r d e r t o b e c o m e h e P r e s i d e n t and
Chief Executive
O f f i c e r
o f
arvard
Manag e m e nt
1044676
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COMPLAINT
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8/20/2019 Bill Gross complaint
6/37
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Company,
wholly-owned
u b s i d i a r y
of
arvard U n i v e r s i t y
r e s p o n s i b l e f o r
managing
a r v a r d ' s
$30 i l l i o n
endowment.
23.
E l - E r i a n
r e c e i v e d h i s f i r s t
s u b s t a n t i v e exposure
o
a o s t
of i g h
- r i s k
d e r i v a t i v e
a s s e
c l a s s e s
w h i l e
a t
Harvard.
Through
h e
use
of
h e s e
h i g h
- r i s k
a s s e t s ,
E l - E r i a n
was
b l e t o
w i t n e s s
a
23 return on
n v e s t m e n t
i n
h i s
only
u l l
y e a r
a t
Harvard growth
h a t came
u r i n g
what
would
soon be
e c o g n i z e d
a s t h e market bubble of h e
mid- 2 0 0 0 s . From
h i s
e x p e r i e n c e , E l - E r i a n
became
convinced of h e
a t t r a c t i v e n e s s
of
uch
high
- r i s k
i n v e s t m e n t s ,
e s p e c i a l l y
s i n c e he
had
not
y e t been
exposed o t h e i r
downside
u r i n g
t h e
Great
ecession
of
007
h a t was
oon
o f o l l o w .
24. A f t e r r e p o r t e d l y
c l a s h i n g w i t h
Harvard
r e s i d e n t L a r r y
Summers, l - E r i a n
began
e x p l o r i n g
h i s
r e t u r n
t o
PIMCO
n
t h e
middle
of
007.
Over
h e c o u r s e
of
e v e r a l
months'
n e g o t i a t i o n ,
a e a l
was
made between
l - E r i a n , Mr.
ross,
and
i l l
Thompson,
IMCO' s hen
-
Chief
x e c u t i v e O f f i c e r , whereby
l - E r i a n
would
e t u r n
t o
PIMCO
s
co
-Chief
x e c u t i v e O f f i c e r
and
co
-Chief nvestment
f f i c e r ,
w i t h t h e i n t e n t i o n
of
l t i m a t e l y
s u c c e e d i n g
one
or
o t h
of
h e s e
i n d i v i d u a l s .
25.
Mr.
ross was l e a s e d t h a t
a
u c c e s s i o n p l a n
was
n
p l a c e
and, o r
a
i m e ,
worked
n
alignment i t h
E l - E r i a n .
Cracks
soon began
o appear n
t h i s
a l l i a n c e ,
however,
s l - E r i a n
sought
t o f o r c e
PIMCO ut
of
t s c o r e
focus
on bonds and
e l a t e d
f i x e d income
e c u r i t i e s
and
n s t e a d
become
a e n e r a l - p u r p o s e
i n v e s t m e n t
management
i r m o f f e r i n g
s t o c k s ,
commodities, e a l
e s t a t e ,
and
hedge fund- l i k e
p r o d u c t s t o
i n v e s t o r s . As ime a s s e d , Mr.
ross
h a r a c t e r i z e d
E l - E r i a n ' s
p l a n
as
i m i l a r t o
t h e
e x t e n s i v e and
a r i e d
men u
t a Cheesecake a c t o r y
r e s t a u r a n t ,
while
i s own
favored approach
was
bonds and
u r g e r s a i m p l e , a s e r
focus
on a
p e c i f i c
type of
e c u r i t i e s
t h a t
had
been
u c c e s s f u l
s i n c e
PIMCO's ounding and
r o v i d e d
s t a b l e r e t u r n s f o r
i n v e s t o r s . In
a c t
i n
t h e
t h r e e
y e a r s
p r e c e d i n g
h i s
d e p a r t u r e ,
Mr.
r o s s ' s
f l a g s h i p
T o t a l
Return
Fund
produced
e t u r n s
t h a t
were
almost double h o s e of h e benchmark
a r c l a y s
US
ggregate
Bond
Index.
26. This was not a
mere
h i l o s o p h i c a l
d i f f e r e n c e between
h e
two
men. Mr.
ross
was
concerned
h a t
PIMCO's
xpansion n t o
new
n v e s t m e n t
f i e l d s
posed
a
a r t i c u l a r
l i a b i l i t y
t o
t h e
company
and
t s
i n v e s t o r s s h o u l d
a n o t h e r
s i g n i f i c a n t e v e n t , such
as h e
c o l l a p s e of
Lehman
B r o t h e r s ,
o c c u r .
This was
of
a r t i c u l a r
concern
because many of
h e new
investment r e a s
f a v o r e d
1044676
5
COMPLAINT
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8/20/2019 Bill Gross complaint
7/37
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by l - E r i a n ,
such
a s
t h e
mortgages
and
e v e r a g e d r e a l
e s t a t e
i n v e s t m e n t s b e i n g
l e d by
a
younger
PIMCO
anaging
d i r e c t o r
n a m e d
Dan
Ivascyn were
under
h e c o n t r o l
o f
o r t f o l i o
managers
w h o
were,
o
v a r y i n g
d e g r e e s ,
independent from
t h e PIMCO
nvestment
Committee.
27.
N e v e r t h e l e s s , i n
l i g h t
o f
h e
u l t i m a t e
p l a n
t o
t r a n s i t i o n
r e s p o n s i b i l i t i e s t o
E l - E r i a n
as
a u c c e s s o r ,
Mr.
ross
m a d e an
f f e r
t o
s t e p
back
from
h i s
r o l e
o n
h e
PIMCO
nvestment
.Committee
e l a t i n g
t o m o st of
PIMCO's
nvestment
f f e r i n g s
and
n s t e a d t o
focus
o l e l y
upon
t s
f i x e d
inco m e
e c u r i t y
p o r t f o l i o
t h e v e r y
bonds and
b u r g e r s
approach
h a t he
formed
a nd
f a v o r e d .
As a r t
o f
h i s
o f f e r ,
Mr. Gross
u g g e s t e d
t h a t he
could s t e p
d o w n from
heading
a
o r t i o n
of
PIMCO's
nvestment
Committee n
f a v o r
of l - E r i a n .
28.
Far from
r e s o l v i n g
t h e
d i v e r g e n c e between
Mr. ross
and
E l - E r i a n ' s
v iew of
PIMCO s
i r e c t i o n ,
u n e x p e c t e d l y
a t
l e a s t
t o
Mr. ross
t h i s
p r o p o s a l
prompted
E l - E r i a n t o
t a k e
s t e p
t h a t
w a s
a r
m o r e
d r a s t i c and damaging
o b o t h
PIMCO nd
t s i n v e s t o r
c l i e n t s .
E 1 - E r i a n ,
ev en
though he
w a s co-Chief
nvestment f f i c e r
and Chief
xecutive O f f i c e r o f
PIMCO,
a s angry
and
a p p r e h e n s i v e
a t t h e
i d e a t h a t
he
would have
o
b e a r s o l e
r e s p o n s i b i l i t y
(and
blame)
o r
t h e h i g h
- r i s k
high- f e e
i n v e s t m e n t s
h e
had
expanded
PIMCO
n t o w h i l e
Mr. ross
wou l d
focus h i s own
f f o r t s
o
PIMCO s
i s t o r i c a l bond
b u s i n e s s .
29.
As e s u l t ,
E l - E r i a n
a b r u p t l y
announced
h i s
r e s i g n a t i o n
from
t h e
p o s t s
o f o
-Chief
Investment f f i c e r
and
c o-Chief
x e c u t i v e
O f f i c e r of
PIMCO
nd v o i c e d
h i s
i n t e n t t o
l e a v e
t h e
c o m p a n y n t i r e l y ,
which he d i d
s h o r t l y
t h e r e a f t e r .
C.
Mr.
r o s s a n d
PIMCO n v e s t i g a t e
D a m a g i n g
Press
L e a k s
30.
Following
E l - E r i a n ' s a b r u p t r e s i g n a t i o n ,
PIMCO
orked
o
c o n t a i n
t h e
i n t e r n a l
f a l l o u t
and a l l o w
t h e
c o m p a n y
h e time
o
handle
l i e n t
n o t i f i c a t i o n s
a s w e l l
a s , i f
p o s s i b l e , t o
s e l e c
a
replacement Chief xecutive
O f f i c e r .
31.
PIMCO
ished
t o ha v e
E l - E r i a n
remain
f f i l i a t e d w i t h
t h e
c o m p a ny
n
a
nominal
c a p a c i t y u n t i l
t h e
end
o f
Maxch 2014.
Doing
s o ,
PIMCO oped,
wou l d
g i v e
i t t h e
time
t needed
t o
p r e p a x e
i n v e s t o r s
f o r
t h e news,
nd
o t h e r w i s e l i m i t t h e
d a m a g e
o
i t s
b u s i n e s s
and
p u b l i c
r e p u t a t i o n
t h a t
E l - E r i a n ' s
d e p a r t u r e wou l d
a u s e .
1044676
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COMPLAINT
-
8/20/2019 Bill Gross complaint
8/37
32.
Although
PIMCO
ould
c o n c e a l
E 1 - E r i a n s
r e s i g n a t i o n
from
i n v e s t o r s and
t h e
p r e s s ,
2
i t
could
not c o n c e a l
t h i s i n f o r m a t i o n from
t s own anaging
d i r e c t o r s . I t
t h e r e f o r e
announced
El-
3
E r i a n s r e s i g n a t i o n
d u r i n g a
January 20, 2 014
meeting of managing
d i r e c t o r s . I t
s t r o n g l y
warned
4
t h a t
no
l e a k
o f
h i s
i n f o r m a t i o n
t o
t h e
media
c o u l d
be
a l l o w e d .
5 33. Unkno w n
o
PIMCO
r
Mr.
r o s s ,
e s s
t h a n
t w o hours
a f t e r
t h e
meeting
a d j o u r n e d ,
6
PIMCO
anaging
d i r e c t o r
A n d rew
B a l l s , who as p r e s e n t f o r
t h e
announcement
e g a r d i n g
El
-
7
E r i a n ,
p l a c e d
a
a l l t o
a e p o r t e r
a t t h e F i n a n c i a l
T i m e s , t h e newspaper
f o r
which
B a l l s
had
8
p r e v i o u s l y
worked. Two
ays
l a t e r ,
t h e
F i n a n c i a l
Times
broke t h e s t o r y , l a y i n g
t h e
f a u l t
f o r El-
9
E r i a n s a b r u p t
r e s i g n a t i o n
a t
Mr.
r o s s s f e e t
and
p o r t r a y i n g
E l - E r i a n s e x i t
a s t h e
r e s u l t
of Mr.
t o
G r o s s s p e r s o n al
conduct a t
PIMCO
h e n n
f a c t t h e r e a s o n f o r
E l - E r i a n s
d e p a r t u r e
wa s
Mr.
1 1
G r o s s s s u g g e s t i o n
t h a t
he c o u l d s t e p
d o v ~ m from
heading a
p o r t i o n
of
PIMCO s
Investment
1 2
Committee a f t e r e x p r e s s i n g
h i s
disagreement
w i t h
E l - E r i a n s
f a v o r i n g
new
n v e s t m e n t
a r e a s s u c h
a
~
13
t h e mortgages
and
l e v e r a g e d
r e a l
e s t a t e
i n v e s t m e n t s and h i s s u p p o r t f o r
t h e s e
a r e a s
remaining
~ '
1 4
independent from
t h e PIMCO
nvestment
Committee
and h i s
anger and
a p p r e h e n s i o n
over h e
i d e a
5
t h a t h e
wo u l d
have t o b e a x s o l e
r e s p o n s i b i l i t y (and blame) o r t h e
h i g h
- f e e
i n v e s t m e n t s
he
h ad
16
promoted
a t
PIMCO.
1 7
34. Both
t h e i n i t i a l
F i n a n c i a l Times a x t i c l e and
numerous o l l o w - u p
media
p i e c e s heape
1 8
p r a i s e on E l - E r i a n and
c a s t c r i t i c i s m o n
Mr. r o s s .
Glossed o v er—or even
l e f t
e n t i r e l y
19
unmentioned
wa s
any
c o m m e n t o n E 1 - E r i a n s a b r u p t
d e p a r t u r e from
a
c o mp a n y
h a t he
h ad been
20
h i r e d t o
e v e n t u a l l y
l e a d , o r o f
l - E r i a n s
abysmal
performance o n
managing
h i s
PIMCO
und. Als
2 1
l e f t
out
wa s h e
c o m p a r a t i v e f a c t t h a t I n f a c t , i n
t h e
t h r e e
y e a r s p r e c e d i n g
h i s
d e p a r t u r e ,
Mr.
r o s s s
2 2
f l a g s h i p
T o t a l
Return
F u n d produced s t e l l a r
r e t u r n s
r e t u r n s t h a t were
almost
double t h o s e o f
h e
2 3
benchmark
B a r c l a y s
US ggregate
B o n d
I n d e x .
24
3 . These
s t o r i e s were f u e l e d
by
a d d i t i o n a l
l e a k s
and
u n a t t r i b u t e d
commentary
from b o t
25
B a l l s and E l - E r i a n
h i m s e l f .
B a l l s undertook t h e s e c l a n d e s t i n e
a c t i o n s
d e s p i t e
knowing
t h a t
t h e
26
p u b l i c a i r i n g
o f h e
c l a s h
between
E l - E r i a n
and Mr.
Gross,
s p e c i a l l y i n
a
l i g h t s o
n e g a t i v e
t o
t h e
27
i n d i v i d u a l
remaining a t
PIMCO,
o u l d
be e x t r a o r d i n a r i l y
harmful o
both
Mr.
r o s s s
p e r s o n a l
28
r e p u t a t i o n
and
h i s
a b i l i t y
t o
perform
h i s d u t i e s
as
PIMCO s
Chief
Investment
O f f i c e r .
7
COMPLAINT
1044676
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8/20/2019 Bill Gross complaint
9/37
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36.
On ebruary
24,
h e
Wall
t r e e t
Journal ran a n
a r t i c l e
e n t i t l e d I n s i d e t h e
Showdow
Atop PIMCO,
h e
World's
B i g g e s t Bond Firm.
As h e a r t i c l e
quoted
d i r e c t l y
fr o m
arguments t h a t
had
o c c u r r e d
between
Mr . Gross a nd E l - E r i a n ,
t b e c a m e
c l e a r
t o Mr .
Gross and
o t h e r s
a t PIMCO
t h a t
t h e s o u r c e
o f
h e l e a k s
was a
m e m b e r
of
v e r y s e l e c t
group
p r i v y
t o
m u ch o f
h e
d i s p u t e
between
M r .
Gross and
E 1 - E r i a n
and
who
n t e n d e d
t o s e l e c t i v e l y
d i s c l o s e i n f o r m a t i o n
p r e s e n t i n g
E l
E r i a n
i n
a
p o s i t i v e
l i g h t
and Mr .
Gross
n
a e g a t i v e
l i g h t
t h a t
was damaging
t o M r .
Gross a nd
PIMCO
t s e l f In
o t h e r
words,
h e i n d i v i d u a l
who e c i d e d t o
l e a k
i n f o r m a t i o n
t o t h e p r e s s
t o harm
M r . Gross and
PIMCO a s
h i g h l y
p l a c e d
a t
PIMCO,
nd
p r i v y
t o s o m e o f
t s h i g h e s t
- l e v e l , m o s t
s e n s i t i v e
d i s c u s s i o n s — d i s c u s s i o n s t h a t were
now p p e a r i n g i n
t h e p r e s s i n h e a v i l y
a l t e r e d forms
d e s i g n e d t o
harm
Mr .
r o s s .
37. In o r d e r t o
uncover
t h e s o u r c e
o f h e s e ongoing
l e a k s ,
D o u g
Hodge,PIMCO's n e w
Chief
xecutive
O f f i c e r ,
and
Jay
J a c o b s ,
PIMCO's r e s i d e n t ,
b e g a n
a n
n v e s t i g a t i o n .
A f t e r
a w e e k
s p e n t
checking
t h e
phone
r e c o r d s
o f
PIMCO a n d l i n e s and
c e l l
phones
t u r n e d
u p
n o t h i n g ,
PIMCO'
i n v e s t i g a t o r s then checked t h e
r e c o r d s
f o r
a second,
i t t l e
- u s e d c e l l phone
s s u e d
t o
B a l l s .
They
demonstrated
t h a t
t h i s
phone had
been
used t o m a k e m a d e n u m e r o u s
a l l s t o t h e F i n a n c i a l
Times
n
J a n u a r y ,
as
w e l l
as
t o
t h e
Wall
t r e e t
Journal
n t h e days
b e f o r e
t h e
F e b r u a r y
24
r t i c l e .
3 .
M r . Gross,
l o n g w i t h
Hodge,
acobs
and
PIMCO s
e n e r a l c o u n s e l
David
F l a t t u m ,
c o n f r o n t e d B a l l s . B a l l s
i n i t i a l l y
d e n i e d a n y t h i n g o t h e r
than a
r i e n d l y
c o n v e r s a t i o n
w i t h t h e
r e p o r t e r s .
A f t e r
d i s c u s s i o n s
w i t h
h i s p r i v a t e a t t o rn e y ,
however,
a l l s
changed h i s
s t o r y
a nd
a d m i t t e d
i n
a s i g n e d
s t a t e m e n t t h a t
he
had spoken t o
both r e p o r t e r s o n
b e h a l f of l - E r i a n
r e g a r d i n g
the c i r c u m s t a n c e s
o fMr
l - E r i a n ' s
r e s i g n a t i o n ,
and
then
r e p o r t e d back
t o E l - E r i a n
t h e
s u b s t a n c e
o f h e s e c a l l s .
B a l l s
f u r t h e r
a d m i t t e d
t h a t he
d i d
not
inform
a ny
o t h e r
i n d i v i d u a l s a t
PIMCO
i t h e r
b e f o r e
o r
a f t e r
t h e
c a l l s
o r
o t h e r w i s e o b t a i n
t h e
compa ny ' s
p e r m i s s i o n
f o r h i s
s t a t e m e n t s .
39. D e s p i t e t h i s
c o n f e s s i o n ,
Hod g e
and
Jacobs
d i d
not
s e e k
t o
t e r m i n a t e
B a l l s o r
o t h e r w i s e
punish
him
f o r l e a k i n g
f a l s e i n f o r m a t i o n i n
a n
e f f o r t t o
harm
M r . Gross
and
PIMCO.
I n s t e a d ,
they
allowed
B a l l s t o s i g n a h i g h l y m i s l e a d i n g
s t a t e m e n t
a d m i t t i n g only
t o
p r o v i d i n g
very
g e n e r a l i n f o r m a t i o n
t o t h e
two newspapers, and
c o n c e a l i n g t h e
f a c t
t h a t
B a l l s ' s t r u e
conduct
was a
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more
e r i o u s ,
c a l c u l a t e d , and e f a m a t o r y .
They
would
u b s e q u e n t l y
u s e
t h i s
s t a t e m e n t
t o
m i s l e a d
2
o t h e r s a t
PIMCO
e g a r d i n g
t h e
t r u e
e x t e n t of
a l l s ' s
misconduct.
3 40. A f t e r
B a l l s ' s c o n f e s s i o n ,
he f f e r e d
t o
r e s i g n
from
PIMCO Mr.
Gross urged h a t
t h
4
company
c c e p t
B a l l s ' s r e s i g n a t i o n
but
wa s
v e r r u l e d
b y
Hodge
and
J a c o b s .
They
argued
h a t
B a l l
5 w a s
o o i m p o r t a n t t o
PIMCO
t
t h a t momen t
and h a t t
would be
b e t t e r
t o
w a i t u n t i l l a t e r i n
t h e y e a
6 when
i s e x i t would
cause
e s s
d i s r u p t i o n
t o
t h e company.
7
41. S e c r e t l y ,
however,
Hodge
and
Jacobs
began
o
a l i g n
a g a i n s t
Mr.
r o s s . In a d d i t i o n
8 t o
p r e p a r i n g
t h e
s i g n e d s t a t e m e n t t h a t
covered
up
a l l s ' s t r u e
misconduct, h e
two
t r u c k
a
u r t h e r
9 d e a l
w i t h
B a l l s w i t h o u t i n f o r m i n g t h e
E x e c u t i v e
Committee
r
t h e
P a r t n e r s
Compensation
o
Committee.
Mr.
ross a t on both
committees.
I n
exchange o r
B a l l s ' s
s i l e n c e r e g a r d i n g
t h e
l e a k s
11
and h e t r i o ' s
e f f o r t s
t o cover
up h e i r
s o u r c e and
e x t e n t ,
PIMCO ould
a g r e e t h a t
B a l l s
would
not
i 2
b e e r m i n a t e d . I n
e f f e c t ,
Hodge and
Jacobs chose
o
s i d e
w i t h
t h e p e r s o n
who
had
undermined
Mr.
t ~ '
13
Gross and
PIMCO
n
p u b l i c .
~ '
1 4
42.
Nor
would
h i s b e
h e
l a s t
t i m e .
S h o r t l y
t h e r e a f t e r ,
Mr.
ross r
ed h e
E x e c u t i v e
4 ~ g
1 5
Committee
o e i t h e r immediately
u l l y t e r m i n a t e E 1 - Er i a n o r ,
f a i l i n g t h a t ,
a t
l e a s t den
him
a
o r t i o
Y p
16
of i s
$50
i l l i o n
bonus
o r
t h e f i r s t q u a r t e r
of2014.
This
would be
a
consequence of h e
damagin
1 7
l e a k s committed on
l - E r i a n ' s
b e h a l f
and, Mr. Gross
u s p e c t e d ,
w i t h
E l - E r i a n ' s
involvement.
The
1 8
Executive
Committee denied b o t h
r e q u e s t s
and
e a c t e d w i t h
h o s t i l i t y
toward Mr.
r o s s ' s
19
u n w i l l i n g n e s s
t o a i d
PIMCO's oncealment of h e
l e a k i n v e s t i g a t i o n
and
n f o r m a t i o n
r e g a r d i n g
t h e
20
c i r c u m s t a n c e s of
1 - E r i a n ' s
d e p a r t u r e .
At
one
p o i n t ,
Hodge u l l e d
Mr.
Gross
s i d e
i n t o
a e p a r a t e
2 1
room
and
warned him
d a r k l y I
could
f i r e
you, you
know.
22
D
PIMCO xecutives
Begin o Plot
o Oust
Mr
ross
23 43.
The
u r m o i l s u r r o u n d i n g
E l - E r i a n ' s
d e p a r t u r e
p r o v i d e d
f e r t i l e
cover
o r
i n d i v i d u a l s
24
s e e k i n g
t o o u s t
Mr.
ross
from
PIMCO
o r
t h e i r
own e r s o n a l
f i n a n c i a l
b e n e f i t
and
e g o s .
25
44.
Foremost
amo ng
h e s e
i n d i v i d u a l s
wa s v a s c y n ,
who
a n
t h e
a l t e r n a t i v e
a s s e t s
26
i n v e s t m e n t s
f o r
PIMCO
The
funds
managed b y Ivascyn focused on
i g h l y
l e v e r a g e d
i n v e s t m e n t s
27
such
as mortgages, ommercial
e a l
e s t a t e and p r i v a t e
e q u i t y
f u n d s .
28
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2
3
4
5
6
8
9
10
11
17
18
19
20
21
22
23
24
25
26
27
28
45.
Unusually
o r
PIMCO, vascyn
wa s
not a r t
o f
h e
Investment
Committee
but a t h e r
o p e r a t e d
h i s
o v u m
funds and
investment
o o l s a s
a
e r s o n a l fiefdom
l a r g e l y
d i s c o n n e c t e d from
h e
b r o a d e r
co mpany.
46.
The
n v e s t m e n t
o f f e r i n g s
u n d e r I v a s c y n
c a r r i e d h e f t y ,
hedge
- f u n d
l i k e
f e e s , y p i c a l l
c h a r g i n g
i n v e s t o r s
n o t
o n l y a s m u c h
s
20
f
l l
i n v e s t m e n t
r e t u r n s ,
b u t
a l s o
skimming
f f
a s
m u c h
s
2
f
l l
a s s e t s under
m a n a g e m e n t
a c h
y e a r ,
r e g a r d l e s s of
e r f o r m a n c e . T h i s
was
a r
i n
e x c e s s
of
IMCO's
y p i c a l
f e e o f 0
a s i s p o i n t s i .
. ,
j u s t o n e - h a l f a
e r c e n t ) .
47.
These t e e p
f e e s ,
c o u p l e d
w i t h
t h e
r e c o v e r y o f
h e
m a r k e t s a f t e r
t h e G r e a t
Recession
o f
007,
e s u l t e d i n I v a s c y n
b e i n g
r e s p o n s i b l e fo r
t h e
g e n e r a t i o n of
undreds
of
i l l i o n s
of
o l l a r s
i n
f e e s
each
y e a r
f o r PIMCO
nd
were a
i g n i f i c a n t c o n t r i b u t i o n
t o
t h e
company's
bottom
l i n e .
I v a s c y n
used h a t
f i n a n c i a l
p e r f o r m a n c e
t o
s e c u r e
a
e a t o n
h e
PIMCO
a r t n e r s
Compensation
Committee.
48.
D e s p i t e
t h e
e n o r m o u s s u m s
PIMCO eaped from
v a s c y n s h i g h
- f e e
investment
v e h i c l e s , t h e
s t r u c t u r e
o f
h e
$1.3
b i l l i o n
PIMCO o n u s pool
i d not
p e c i f i c a l l y
a l l o c a t e
p r o f i t
t o
t h e
v a r i o u s
b u s i n e s s
u n i t s
such as
v a s c y n s .
As
consequence,
vascyn
s aw
i s
s h a r e
o f
h e
p r o f i t
pooled
with
o t h e r
b u s i n e s s
u n i t s p r o f i t s .
49. Much o
I v a s c y n s
c h a g r i n ,
h i s
a l s o m e a n t h a t
h i s
annual
b o nus
was
drawn fro m
h
s a m e
pool
as
e n i o r
e x e c u t i v e s ,
l i k e Mr. ross,
who ad
g u a r a n t e e d
compensation
arrangements
with
PIMCO.
As e s u l t ,
Ivascyn
b e l i e v e d
t h a t PIMCO
a s paying
Mr.
ross e n s o f
i l l i o n s o f
d o l l a r s t h a t
should
hav e n s t e a d
g on e o
I v a s c y n .
50.
C o n s e q u e n t l y ,
s h o r t l y
a f t e r g a i n i n g
h i s
s e a t ,
I v a s c y n
began
u b l i c l y
l o b b y i n g
t h e
P a r t n e r s
Compensation
Committee o r
a
a r
l a r g e r
s h a r e o f
h e b o nus
o o l .
I v a s c y n
a l s o
began
o
u r g e
t h a t ,
c o n t r a r y t o
PIMCO's
e c a d e s
- o l d
s t r u c t u r e ,
compensation
h o u l d
be
l l o c a t e d
o n
h e
b a s
of
ach n v e s t m e n t
a r e a s r e l a t i v e
p r o f i t .
C o n v e n i e n t l y , h a t
m o v e
would
e s u l t i n
f a r
l a r g e r
s u m s
b e i n g
p a i d t o
I v a s c y n
h i m s e l f .
5 1 .
S i m u l t a n e o u s l y ,
I v a s c y n
began
a
campaign
o be n a m e d
h e
n e x t
PIMCO
hief
Investment f f i c e r , a
m o v e h a t Mr.
ross opposed
due
o
I v a s c y n s
l a c k of
x p e r i e n c e
o u t s i d e
h i s
s p e c i f i c
i n v e s t m e n t
f i e l d .
I v a s c y n s r e s p o n s e
was o warn Mr.
ross
and
o t h e r s t h a t
he
wasn't
a
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2
3
4
5
6
7
8
9
10
11
12
13
~ ' 14
5
16
17
18
19
20
21
22
23
24
25
26
27
28
long term
p l a y e r and
t h a t
i f
he
d i d
not
m m e d i a t e l y
r e c e i v e what he
b e l i e v e d
was
i s
due he
wou ld
not
remain
a t
PIMCO
52.
As h e s e
c o m p l a i n t s and p r e s s u r e s kept mounting,
v a s c y n
h a t c h e d a
p l a n
t o
o u s t
Mr
Gross
fr om
PIMCO
Doing
so
would
remove
an
e x e c u t i v e
p h i l o s o p h i c a l l y
opposed
t o I v a s c y n ' s
h i g h
- r i s k , h i g h - f e e
i n v e s t m e n t
model,
r e a t e an opening
f o r
a
n e w Chief
n v e s t m e n t
O f f i c e r ,
and,
most
m p o r t a n t l y
t o I v a s c y n , r e e
up a
i g n i f i c a n t p o r t i o n o f
h e
bonus
pool
o be
a l l o c a t e d by
h e
P a r t n e r s Compensation
Co mmittee
o n which
he
s a t .
53.
I v a s c y n
found
an
a l l y
i n
t h e
s i m i l a r l y
m o n e y
- d r i v e n
B r e n t
H a r r i s ,
w h o
was
n
c h a r g
o f
PIMCO s
mutual
fund
complex,
h e T o t a l
Return
Fund f e e s ,
and n e w
n v e s t m e n t
p r o d u c t s .
H a r r i s
was p a r t i c u l a r l y
proud o f
i s
e f f o r t s
t o
r a i s e
t h e a n n u a l
f e e s o n
v a r i o u s
f u n d s ,
such
a s t h e
T o t a l Return
Fund, h r o u g h c r e a t i v e l y
l a b e l i n g such
f e e s
a d m i n i s t r a t i v e
c o s t s .
54.
H a r r i s '
f o c u s
o n r a i s i n g
f e e s
p a i d
by n v e s t o r s ,
and
t h e
p r o f i t t h a t
g e n e r a t e d ,
l e d t o
c o n f l i c t
w i t h
Mr.
r o s s ,
w h o
a c c u r a t e l y
r e c o g n i z e d t h a t a c t i v e l y
manag ed funds such
a s
t h e
T o t a l
Return
Fu n d
were
b e g i n n i n g
t o f a c e f e e
p r e s s u r e fr om
l e s s
e x p e n s i v e , p a s s i v e l y
manag ed
f u n d s .
Although
M r .
Gross b e l i e v e d t h a t
a c t i v e
m a n a g e m e n t o f
unds had
t h e
p o t e n t i a l
t o
d e l i v e r
v a l u e t o
i n v e s t o r s
r e l a t i v e t o p a s s i v e
i n d e x
t r a c k e r s
d e s p i t e t h e added
c o s t s o f
manage m e nt , h e
n e v e r t h e l e s s
r e c o g n i z e d
t h e
c o m p e t i t i v e p r e s s u r e
p a s s i v e
m a n a g e m e n t
r e s e n t e d .
H a r r i s ,
however,
ook
Mr .
G r o s s ' s
s u g g e s t i o n t h a t
he
b e g i n
c o n s i d e r i n g
r e d u c i n g f e e s
a s
tantamount
o a
d i r e c t ,
p e r s o n a l
a t t a c
o n
H a r r i s ' o n g o i n g
f i n a n c i a l
b e n e f i t f r o m
PIMCO n d prompted
H a r r i s
t o b e c o m e
one
o f
h e
most
v o c a l
s u p p o r t e r s f o r
o u s t i n g
Mr.
r o s s .
55.
I v a s c y n
and H a r r i s
wou ld
r e c r u i t
o t h e r
a m b i t i o u s
PIMCO
x e c u t i v e s
w h o
s t o o d
t o
g a i n
fr om an
u p h e a v a l ,
such
a s
PIMCO s i r e c t o r o f n e w
p r o d u c t s
W e n d y
C u p ps
and
J a c o b s
h i m s e l f .
E.
Mr
ross
s Forced
f r o m
PIMCO
56.
S e n s i n g
t h a t
Mr.
r o s s ' s
r e l a t i o n s h i p
w i t h
PIMCO as
a t
a i p p i n g
p o i n t
and
e a g e r
t o
e x p l o i t t h e
o p p o r t u n i t y f o r
t h e i r
own i n a n c i a l
g a i n ,
I v a s c y n
and h i s
c o - c o n s p i r a t o r s ,
n c l u d i n g
J a c o b s , Cupps, and o t h e r s ,
informed
PIMCO
h a t
i f
Mr .
Gross
were
n o t d r i v e n
fr om
t h e
c ompa ny,
t h e y
wou ld r e s i g n .
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COMPLAINT
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8/20/2019 Bill Gross complaint
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1 57. Forced i n t o a o r n e r
by h e
t h r e a t
o f
e s i g n a t i o n s and
m o r e
m p o r t a n t l y t o
Mr.
Gross
2
t h e p o t e n t i a l
damage
h a t t h e s e
r e s i g n a t i o n s
o r
t h e p u b l i c t h r e a t
t h e r e o f
c o u l d c a u s e
t o
PIMCO nd
3
i t s
i n v e s t o r s ,
Mr.
Gross began
t o n e g o t i a t e a d e a l i n which
he would r e s i g n
from
t h e
p o s t o f
Chief
4
Investment O f f i c e r .
Mr.
Gross
would be
r e s p o n s i b l e
f o r
t h e
f i x e d
income
s e c u r i t i e s and
l e a v e
t h e
5
management
o f
h e o t h e r
i n v e s t m e n t v e h i c l e s
t o h i s s u c c e s s o r s
a s
Chief
nvestment O f f i c e r
6
Ivascyn and Mihir Worah.
7 5 Ivascyn and
t h e
o t h e r
c o n s p i r a t o r s
had
been
a b l e
t o
s p r i n g t h e i r
t r a p .
Th e
E x e c u t i v e
8
Committee,
omposed
of
h o s e w h o
s t o o d
t o b e n e f i t t h e most,
both
f i n a n c i a l l y and
i n
pow er w i t h i n
9 PIMCO, a t c h e d t h e i r p l a n
t o
o u s t
PIMCO s
founder
and l e a d i n g
f i x e d income
i n v e s t o r
f o r
over
1 o
f o u r
d e c a d e s . They t i l l ,
however,
had
t o g e t
A l l i a n z ,
t h e
owner
o f
PIMCO,
n
board w i t h
t h i s
i l l i c
11
p l a x l .
, , , , 1 2
59.
Over h e
next
few d a y s ,
h e
E x e c u t i v e Committee
c o n t i n u e d
d i s c u s s i o n s w i t h
Mr .
1 3
Gross
n
o r d e r
t o
l e a d
him t o b e l i e v e t h a t
a workable
arrangement
was
t i l l
p o s s i b l e .
~
1 4
60. Michael
Diekmann,
h e
Chief
x e c u t i v e
O f f i c e r
of
l l i a n z ,
was
e r s o n a l l
comin
t
Q ~
p
Y
g
1 5
C a l i f o r n i a o s t e n s i b l y
t o
r e s o l v e t h e d i s p u t e
w i t h
Mr.
r o s s . I n
advance
o f
i s a r r i v a l ,
M r .
Gross,
' ~ .
1 6
Jocquim F a b e r ,
h e former
head
of
l l l a n z Global
I n v e s t o r s
and
~PIMCO s u l t i m a t e
p a r e n t
company
i
7
and B i l l
Thompson, h e former
PIMCO
hief
x e c u t i v e O f f i c e r ,
me t and
o u t l i n e d
a p l a n
t h a t
was,
1 8
f o r a l l
i n t e n t s and
p u r p o s e s ,
an
o u t l i n e
f o r t h e
t r a n s i t i o n of M r .
r o s s s
c a r e e r
a t
PIMCO.
1 9
61.
Under
h e p l a n ,
M r . Gross a g r e e d t h a t he would
r e s i g n
as
Chief
nvestment
O f f i c e r ,
20
a s Chairman of
h e
Investment
Committee, and
as
a
m e m b e r
of
both t h e
E x e c u t i v e
Committee
an d
2 1
t h e
P a r t n e r s Compensation
Committee. To p r e v e n t t h e f i r m
he founded
from
going i n t o
t o t a l
chaos
22
and
a
downspin,
u r t i n g
i t s i n v e s t o r s
i n
t h e
p r o c e s s , M r .
Gross a l s o
a g r e e d t o
have h i s
annual
bonus
23
c u t
by
h a l f o r
mor e
n
o r d e r
t o
p l a c a t e
t h e
PIMCO anaging
d i r e c t o r s
w h o
were
s e e k i n g
t o
e n s u r e
24
t h a t they r e c e i v e d
a
a r g e r
s h a r e
o f
h e company s
p r o f i t s
f o r
t h e m s e l v e s .
25
62.
M r .
Gross
even
a g r e e d
he
would
c e a s e
a l l
management o f h e
PIMCO
o t a l
Return
26
Bon d
Fu n d t h a t he
had b u i l t and would
i n s t e a d be handed c o n t r o l
of a
p o r t f o l i o
t h a t
was
e s s t h a n
27
10
n
s i z e
o f
i s
then- c u r r e n t
a s s e t s
under
management.
28
1 2
COMPLAINT
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63. And he
a g r e e d t o what
he c o n s i d e r e d
f u r t h e r
h u m i l i a t i o n : Mr.
Gross
would be
b a r r e d
2
from
t h e
PIMCO f f i c e s , and
l e f t
t o
h a n d l e
t h e remaining
p o r t f o l i o
from
a n o t h e r
o f f i c e
s e p a r a t e and
3
away from
PIMCO's.
4
64. T h i s
p l a n
s t r i p p e d
Mr.
Gross
o f
power,
o s i t i o n ,
and
c o m p e n s a t i o n .
N e v e r t h e l e s s ,
5
Mr.
Gross b e l i e v e d
i t
would be
b e t t e r
f o r
PIMCO
nd
t s i n v e s t o r s t h a n
t h e
a l t e r n a t i v e o f
a
6 p r o t r a c t e d
f i g h t
am ong
PIMCO's e a d e r s h i p . A d d i t i o n a l l y ,
t a l l o w e d
h i m
t o
r e t u r n
t o bond
7
i n v e s t i n g , r e e o f
h e
b a t t l e s
w i t h
p e o p l e l i k e I v a s c y n ,
H a r r i s
and
E l - E r i a n
w h o
s o u g h t
t o
t r a n s f o r m
8
PIMCO
n t o
a h i g h - r i s k ,
h i g h
- f e e
f u l l s e r v i c e
i n v e s t m e n t
f i r m .
9 65. A f t e r e - m a i l
and
t e l e p h o n e
d i s c u s s i o n s ,
Faber
c a l l e d
Diekmann and informed h i m
o f
o
t h e outcome o f
h e d i s c u s s i o n and
Mr. r o s s ' s agreement
o t h e
p r o p o s a l .
Diekmann
a r r i v e d
i n
1 1
C a l i f o r n i a t h a t e v e n i n g .
„ ~ , _ , , 1 2
66.
The n e x t
morning,
o n o r
a b o u t
September
18,2014,
Diekmann met
Mr.
Gross
o r
. . . .
•
«
1 3
b r e a k f a s t .
Over
c o f f e e , Diekmann o r m a l l y
o f f e r e d Mr.
Gross
h e
same
p l a n
t h a t
had
been
worked
~ ' ' 1 4
out
n t h e
p r i o r
d a y ' s m e e t i n g . Diekmann
c a l l e d
t h i s p l a n a s i d e c a r
i n
o r d e r
t o
em
h a s i z e
t h a t
Q~ p
1 5
w h i l e Mr.
Gross would be o p e r a t i n g
more n d e p e n d e n t l y ,
he would
t i l l be
c l o s e l y
l i n k e d
t o
PIMCO
1 6
and
headed
i n
t h e
same
d i r e c t i o n .
Mr. Gross
a c c e p t e d
Diekmann's f f e r .
1 7
67. Following
b r e a k f a s t ,
t h e
two
men
a g r e e d
t o
meet
a g a i n a t noon.
Diekmann
e f t t o
1 8
meet w i t h
Hodge and
J a c o b s t o e n s u r e
t h a t
PIMCO
wholly
owned by A l l i a n z
and
t h u s s u b j e c t
t o
1 9
Diekmann's c o n t r o l
a s A l l i a n z ' s
Chief
x e c u t i v e
O f f i c e r
a g r e e d t o
t h e p l a n .
20
68.
N o t w i t h s t a n d i n g
Diekmann's agreement,
Hodge,
a c o b s
and t h e
o t h e r
PIMCO
2 1
e x e c u t i v e s
s o m e h o w
o v e r r u l e d
t h e Chief
x e c u t i v e
O f f i c e r
o f
l l i a n z and
f o r c e d Diekmann
o
22
r e n e g e
o n
h i s agreement
w i t h Mr.
r o s s .
2 3 69.
Thus,
t
noon
o n
Septemb er 25,
2014,
Mr.
Gross
e n t e r e d
what
would be
h i s
l a s t
24
meeting a t
PIMCO Diekmann, f t e r
b e i n g
s t r o n g - a x r n e d
by
h i s
s u b o r d i n a t e s ,
i m m e d i a t e l y
y i e l d e d
2 5
t h e f l o o r
t o Hodge.
26
70.
Hodge proceeded
t o o u t l i n e an e n t i r e l y
d i f f e r e n t
r o l e f o r
Mr.
Gross
h a n
t h e one
h a t
2 ~
Diekmann had
a g r e e d
t o j u s t
h o u r s
b e f o r e and t h a t Mr.
Gross had p r e v i o u s l y
n e g o t i a t e d and
a g r e e d
2 8
t o
w i t h
Faber
and
Thompson.
1 3
COMPLAINT
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8/20/2019 Bill Gross complaint
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2
3
4
5
6
7
8
9
10
11
. ~ .
12
13
~ ' 14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
71.
Hodge's s o - c a l l e d s o l u t i o n
e f f e c t i v e l y
was
Mr.
r o s s ' s
t e r m i n a t i o n
from
PIMCO,
but
drawn
out n
a way h a t
PIMCO ould c o n c e a l
t h e news from
i n v e s t o r s , t h e
p r e s s , and t h e
maxket e n e r a l l y .
Hodge e x p l a i n e d t h a t Mr.
Gross would
b e
allowed o
remain a t
PIMCO
through
December
2014.
72.
Mr.
Gross was
o l d t h a t i f
he d i d
n o t a c c e p t
t h i s
new
p r o p o s a l , h e
would
be
t e r m i n a t e d
from
PIMCO
m m e d i a t e l y .
73. Mr.
Gross could
not a g r e e
t o
p a r t i c i p a t e
i n
t h i s d e c e i t
on
n v e s t o r s and
t h e
p u b l i c by
a c c e p t i n g
t h i s s o - c a l l e d
o f f e r of
i s
e f f e c t i v e t e r m i n a t i o n .
As e s u l t , h e
was o r c e d
out of
h e
company he
had
founded
and l e d f o r
over 40 e a r s r a t h e r
than
p a r t i c i p a t e
i n
t h e
d e c e i t
an d
d i s h o n e s t y t h a t
had been
o u t l i n e d ,
t o say n o t h i n g
of enduring
t h e
h u m i l i a t i o n
PIMCO
ad
planned
f o r
him.
The
PIMCO o n us Pool
74.
PIMCO
s t a b l i s h e d
and
p r o v i d e s a p r o f i t - s h a x i n g
p l a n
f o r
i t s managing
d i r e c t o r s .
The c o n t o u r s of
h i s
p r o f i t - s h a r i n g o r
bonus pool
p l a n a r e
governed b y
h e
Amended
and
R e s t a t e d
P a c i f i c
Investment
Management
Company
LLCNon- Q u a l i f i e d
P r o f i t
S h a r i n g
Plan
d a t e d
as
of
January 1 ,
2012
the P l a n ) .
A
r u e and c o r r e c t
copy
of
h a t
c o n t r a c t
i s
a t t a c h e d
h e r e t o
a s
E x h i b i t
1 .
75.
Under h e P l a n ,
Mr.
Gross
was n t i t l e d t o r e c e i v e
20
f h e
e n t i r e
p r o f i t s h a r i n g
bonus pool
each
y e a r .
Thus, o r
example, n
2013
h e p r o f i t s h a r i n g
bonus
p o o l
t o t a l e d
$ 1 . 3 b i l l i o n
and Mr. Gross
r e c e i v e d
$300
m i l l i o n
over h e
c o u r s e of
h a t
y e a r .
76.
Th e
Plan
p r o v i d e s
f o r
p r o f i t s h a r i n g
payments o be
made
o
PIMCO's managing
d i r e c t o r s on
a
u a r t e r l y
b a s i s . The q u a r t e r s
f o r
w hic h
PIMCO's
managing
d i r e c t o r s
e a r n
bonuses
a r e
c a l e n d a r
q u a r t e r s ,
and
t h e
r e l e v a n t
c u t o f f d a t e s a r e
March
31, June
3
, September
3
nd
December
31.
77. For
2014,
Mr.
Gross was
on t r a c k
t o
r e c e i v e a
bonus
n
e x c e s s
of
a p p r o x i m a t e l y
$250
m i l l i o n .
Although
bonuses
were p a i d
q u a r t e r l y ,
they were
weighted
more
h e a v i l y
towards
h e
end
of
h e y e a r with
t h e
m a j o r i t y of h e
bonus
pool money
being
d i s t r i b u t e d
i n
t h e
t h i r d and
f o u r t h
q u a r t e r s .
In
t h e f i r s t
two
q u a x t e r s
of2014
Mr.
Gross
r e c e i v e d
bonuses
of
p p r o x i m a t e l y
$16
14
1044676
COMPLAINT
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8/20/2019 Bill Gross complaint
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2
3 .
4
5
6
7
8
9
10
11
„ ~ 12
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13
~ ' '
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
m i l l i o n .
He
as
l s o
informed h a t he
c o u l d
expect
$80
i l l i o n
as i s
t h i r d
q u a r t e r
bonus
payment
s c h e d u l e d
f o r
September 3
, 014
i t h
t h e
remainder
o
be
p a i d
a t
t h e
f o u r t h
q u a r t e r .
78. Mr.
Gross
was
o r c e d
out
o f
PIMCO n
September
25,
014
m e r e
days
e f o r e t h e
t h i r d q u a r t e r
ended
o n
September
30.
On
eptember 29, 014,
Mr.
r o s s ' s a t t o r n e y
wrote
o
Flattum
s e e k i n g
a s s u r a n c e s t h a t
PIMCO
o ul d
t
l e a s t pay h e
bonus h a t
Mr.
ross had
a r n e d f o r
t h e
t h i r d
q u a r t e r .
Nearly
a m o n t h a t e r ,
o n
October
20,
014,
PIMCO's
awyers
e s p o n d e d ,
denyin
t h a t Mr.
ross
was n t i t l e d t o
any
m o n e y ,
e s p i t e
t h e
f a c t
t h a t
t h e
t h i r d
q u a r t e r
had
s s e n t i a l l y
ended.
PIMCO's
s u a l custom
and
p r a c t i c e
was o pay
e p a r t i n g
employees an
p p r o p r i a t e
s h a r e
f o r
p a r t i a l l y
completed
q u a r t e r s .
79.
PIMCO
as
e r s i s t e d
i n
i t s
r e f u s a l
t o
pay
Mr .
ross any
o r t i o n
o f
i s
t h i r d q u a r t e r
bonus,
n
b r e a c h
o f
h e
P l a n .
PIMCO
uarantees
Mr.
ross's
E m p l o y m e n t or
Five
Years
80.
In h e
midst
o f
h e
e f f o r t s
by
Ivascyn
and
o t h e r s
t o
o u s t Mr .
ross
o r
t h e i r o v u m
p e r s o n a l g a i n ,
o t h e r s a t
PIMCO
e c o g n i z e d h i s
tremendous
v a l u e t o
both h e
c o m p a n y
and
t s
i n v e s t o r s .
81. At
PIMCO l l
managing
d i r e c t o r s
a r e
c o n s i d e r e d
t o
be p a r t
o f h e
company's
man a g e m e n t
o a r d . The
ma na g e m e n t
board o f
PIMCO s
r e s p o n s i b l e
f o r ,
a m o n g
t h e r
t a s k s ,
e l e c t i n g
PIMCO
x e c u t i v e s
t o
s e a t s o n
commi ttees such
as
h e
Executive
Committee
and h e
Investment
Committee,
s w e l l
as
o
o f f i c e s such
as
Chief
Investment
f f i c e r .
I n d i v i d u a l s
e l e c t e d
t o such
p o s t s
s e r v e
a
term o f
e a r s b e f o r e
having
o
s t a n d f o r
r e e l e c t i o n .
82.
This
term
o f
f f i c e c r e a t e s
what n
e f f e c t
i s a
u a r a n t e e o f
m p l o y m e n t
t
PIMCO
r a t i f i e d
by
h e
PIMCO
anaging
d i r e c t o r s who
omprise h e
company's
ma na g e m e n t
o a r d .
A f t e r
e l e c t i o n
t o
such
an
f f i c e ,
h o l d e r s
o f
h a t p o s i t i o n
can
expect
h a t
t h e y
would
only
be
t e r m i n a t e d f r o m
PIMCO o r
g o o d
c a u s e .
83.
N o t ven
powerful
o u n d e r s
o f
PIMCO
uch
as
Mr.
ross
were
e x e m p t
r o m
h e
e l e c t i o n
p r o c e s s . In
a c t , Mr .
ross
himself
was
overwhelmingly
e e l e c t e d
t o
h i s
p o s i t i o n
as
Chief
Investment f f i c e r
i n 2014.
Mr.
r o s s ' s
e l e c t i o n
c a r r i e d
a
term
o f
i v e
y e a r s .
1044676
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COMPLAINT
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8/20/2019 Bill Gross complaint
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2
3
4
5
6
7
8
9
10
11
12
13
~ ' '
14
t~
5
16
17
18
19
20
21
22
23
24
25
26
27
28
84.
As
consequence,
h e
PIMCO
management
board
f f e c t i v e l y
g u a r a n t e e d
Mr.
Gross's p o s i t i o n
a t
PIMCO n t i l
t h e next
e l e c t i o n
c y c l e
i n
2019.
85.
Thus, h e o u s t e r
o f
Mr.
Gross
by
Hodge, vascyn
and
o t h e r s
was
a l c u l a t e d
not only
t o s e i z e
f u r t h e r c o n t r o l
o f
PIMCO
nd
t h e b o n u s
p o o l
but
a l s o
caused
PIMCO o
b r e a c h
an
implied
em ployment o n t r a c t
with
Mr .
Gross.
86.
As a r t of
i s
compensation from
PIMCO r .
Gross
r e c e i v e d
s t o c k
o p t i o n s an d
e q u i t y g r a n t s
t h a t
were
s u b j e c t t o v e s t i n g
p e r i o d s . At
h e
time
o f
i s
o u s t e r
Mr .
Gross
h e l d
s i g n i f i c a n t
p o s i t i o n s
t h a t
had
not
y e t
v e s t e d .
Thus,
as a
u r t h e r
consequence o f
PIMCO's
b r e a c h
o f
t h e
implied
employment
o n t r a c t Mr.
Gross
has been
denied
t h e
o p p o r t u n i t y
t o
remain
a t
PIMCO
f o r
t h e f u l l v e s t i n g
p e r i o d .
FIRST
CAUSE
O
CTION
(Constructive
Termination)
87.
P l a i n t i f f
r e a l l e g e s
and
i n c o r p o r a t e s by
r e f e r e n c e each
and
every
a l l e g a t i o n
c o n t a i n e d
i n
t h e
paragraphs above
as though f u l l y
s e t
f o r t h h e r e i n .
88.
At
l l
r e l e v a n t
times h e r e i n
l a i n t i f f
and
Defendants had
an
employer
-employee
r e l a t i o n s h i p .
89.
As
l l e g e d h e r e i n
Defendants took
a d v e r s e
employment
a c t i o n s
a g a i n s t
P l a i n t i f f
u p
t o
and
i n c l u d i n g
what was,
n
e f f e c t
a e r m i n a t i o n .
90.
This t e r m i n a t i o n
was
m o t i v a t e d
by a
d e s i r e
t o
deny
P l a i n t i f f
h i s
s h a r e o f
h e
Defendants'
bonus
pool and o t h e r
compensation,
n c l u d i n g s t o c k
o p t i o n s
and e q u i t y
g r a n t s
t h a t
wer
~ s u b j c t t o a v e s t i n g
p e r i o d .
Defendants'
conduct
was o n t r a r y
t o
p u b l i c
p o l i c y
as t
was
d e s i g n e d
t o
d e p r i v e P l a i n t i f f
o f
ncome
t h a t had
been
e a r n e d
a s
w e l l
as
t o
punish
P l a i n t i f f
o r
p r o t e c t e d
conduct
i n c l u d i n g
but
not
i m i t e d
t o t h e
e x e r c i s e
of
i s
F i r s t
Am e n d m e n t
i g h t s .
91.
Moreover,
h i s
t e r m i n a t i o n
v i o l a t e d t h e d e a l
s t r u c k
between Mr .
Gross
and
D i e k m a n
i n
September
2014
where
PIMCO u r t h e r
g u a r a n t e e d
t h a t Mr .
Gross
would
have
a
o s i t i o n
a t
PIMCO t a
m i n i m um
through t h e
end o f
2014
and
would
be
e n t i t l e d t o
c o l l e c t
a l l
bonuses
an d
o t h e r
compensation f o r
t h a t y e a r .
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COMPLAINT
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8/20/2019 Bill Gross complaint
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92.
F i n a l l y ,
t h i s t e r m i n a t i o n
was n v i o l a t i o n
of
e f e n d a n t s '
commitment
o employ
P l a i n t i f f f o r
a u l l
term of i v e
y e a r s f o l l o w i n g
h i s
most e c e n t
e l e c t i o n
t o
t h e
PIMCO
x e c u t i v e
Committee
and
t h e
PIMCO
n v e s t m e n t
Committee.
D e f e n d a n t s '
conduct
n
t e r m i n a t i n g
P l a i n t i f f
w i t h o u t cause
was
c o n t r a r y
t o p u b l i c p o l i c y .
93.
As a d i r e c t
and
proximate
r e s u l t of
e f e n d a n t s ' wrongful
e r m i n a t i o n ,
P l a i n t i f f
h a s
been
damaged i n an
amount
o
be
d e t e r m i n e d a t
r i a l b u t i n
no
e v e n t l e s s t h a n
hundreds
of
i l l i o n s
of
o l l a r s .
SECOND
CAUSEOF
ACTION
(Breach of Written
Contract)
94.
P l a i n t i f f
r e a l l e g e s and
i n c o r p o r a t e s
by r e f e r e n c e each
and
e v e r y
a l l e g a t i o n
c o n t a i n e d
i n
t h e
p a r a g r a p h s above
a s
though
f u l l y
s e t f o r t h
h e r e i n .
95.
The
Amended and
R e s t a t e d P a c i f i c
Investment
Management
Company
Non
-
Q u a l i f i e d
P r o f i t
S h a r i n g P l a n ,
a s
amended
and
r e s t a t e d a s of
a n u a x y
1 ,
2012
governs
h e
PIMCO
managing
d i r e c t o r
p r o f i t
s h a r i n g
p l a n and bonus
p o o l .
96.
T h i s c o n t r a c t
was i g n e d
by
E l - E r i a n and
Hodge
on b e h a l f
of
h e
Company.
The
s i g n a t u r e
page a l s o
b e a r s
t h e
s i g n a t u r e of l a t t u m ,
PIMCO's
g e n e r a l
c o u n s e l .
97.
This
c o n t r a c t e s t a b l i s h e d
t h e
PIMCO onus pool
f o r
PIMCO's e n i o r
l e a d e r s h i p ,
i n c l u d i n g M r .
r o s s .
As u c h ,
M r . Gross
s
an
n t e n d e d
b e n e f i c i a r y
of
h i s
c o n t r a c t .
98.
Defendants
b r e a c h e d t h i s
c o n t r a c t
by, among
o t h e r
r e a s o n s , w i l l f u l l y
t e r m i n a t i n g
Mr
Gross mere
days
b e f o r e
payment
was due o him under
h e c o n t r a c t
and f o r
t h e
s o l e
p u r p o s e of
evading
t h e
c o n t r a c t u a l
o b l i g a t i o n s
f o r
t h e i r
own
e n e f i t .
99.
For
former
employees
such
a s Mr.
r o s s , s e c t i o n
3 . 1
of
h e
c o n t r a c t
p r o v i d e s
t h a t
[u] pon
h e
T e r m i n a t i o n
of
Employment
of
a
a r t i c i p a n t . . .
h i s
o r
h e r
p a r t i c i p a t i o n
i n t h e
P l a n
s h a l l
be
e r m i n a t e d ,
e x c e p t w i t h
r e s p e c t t o
t h e
P r o f i t
S h a r i n g
p a y a b l e ( i )
w i t h
r e s p e c t
t o
t h e
Covered
Q u a r t e r
p r e c e d i n g
h i s o r
h e r
T e r m i n a t i o n of
Employment...
100.
This was o t
a d i s c r e t i o n a r y
payment.
S e c t i o n
3 . 4 ( a ) of
h i s
c o n t r a c t
p r o v i d e s
t h a t
a
p a r t i c i p a n t
such
a s
M r .
Gross s h a l l
be
e n t i t l e d t o r e c e i v e
from
t h e
P r o f i t
P a r t i c i p a t i o n
P o o l ,
w i t h
1044676
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COMPLAINT
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8/20/2019 Bill Gross complaint
19/37
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r e s p e c t t o each
of h e
f i r s t
t h r e e q u a r t e r s
of
a
a l e n d a x
y e a r
b u t
only
t o
t h e e x t e n t a n y
such q u a r t e r
a
Covered Q u a x t e r ) ,
a
r o f i t S h a r i n g
payment...
1 0 1 .
Covered
Q u a r t e r s a
d e f i n e d term i n
t h e c o n t r a c t , and
m e a n s each
c a l e n d a r
q u a r t e r
(or
p o r t i o n
t h e r e o
s
t o
which
t h e
Plan
s
i n
e f f e c t .
1 0 2 .
As
e s u l t ,
under
h e terms of h e
c o n t r a c t , Mr.
Gross w a s
n t i t l e d t o
r e c e i v e
a
r o f i t
s h a x i n g p a y m e n t w i t h
r e s p e c t t o
t h e
p o r t i o n of
h e c a l e n d a r
q u a r t e r
p r e c e d i n g
h i s
t e r m i n a t i o n
of
e m p lo y m e n t w i t h
PIMCO, s
w e l l
a s
a
t r u e u p of
h e
p r e v i o u s
q u a r t e r s
so
t h a t
t h e
t o t a l
compensation Mr.
Gross w a s o r e c e i v e f o r
2014 w a s
20 f h e
bonus p o o l
m u l t i p l i e d
by
h e
p e r c e n t a g e
of
h e y e a r
t h a t he
worked.
1 0 3 .
By
e f u s i n g
t o
pa y
a n y p o r t i o n
of h e s e
funds o Mr.
r o s s ,
and
a s a
e s u l t
of h e i r
conduct s
s e t
f o r t h i n
t h i s
Complaint,
e f e n d a n t s b r e a c h e d
t h e
terms and
c o n d i t i o n s of
h i s
c o n t r a c t .
104.
As
d i r e c t a nd
p r o x i m a t e
r e s u l t
of
e f e n d a n t s '
b r e a c h ,
l a i n t i f f