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September 16, 2011 at 09:37 AM
A jury has awarded Jeffrey Gundlach and co-defendants $66.7 million but found he breached his fiduciary duty and violated trade secrets when the star fund manager broke off from TCW to start rival firm DoubleLine Capital.
In a six-week trial centered on issues of splitting fees and split loyalty, the Los Angeles jury found that fund manager TCW owed defendants unpaid wages earned before TCW, which is owned by Paris-based Societe Generale, fired Gundlach (left) in 2009.
Gundlach has sought some $500 million in damages on the entirety of earnings he would have had coming to him through this year based on his contract with the firm. He claims TCW fired him to avoid having to pay performance fees on a hot fund that outperformed the competition and was a magnet for investors.
On the breach of fiduciary duty charge, the jury found Gundlach guilty but awarded no damages to TCW because Gundlach had not acted with malice. The Los Angeles Times reports Gundlach emerged from the jury verdict on Friday with a victorious smile, saying it’s “67-to-0” in terms of the jury’s disposition of damages.
But it will be Los Angeles County Judge Carl West who decides what if any damages Gundlach must pay to TCW on the charge that he misappropriated trade secrets. The charge stems from the fact that just weeks after his firing in December 2009, Gundlach along with about half of TCW’s fixed-income staff formed rival firm DoubleLine Capital. TCW claims DoubleLine wrongfully gained processes, methods and client data from his former firm, where over two decades the superstar manager had attracted tens of billions of dollars in assets under management.
