November 9, 2015 / 7:04 PM / 2 years ago

Pimco urges dismissal of 'Bond King' Bill Gross' lawsuit

Bill Gross speaks at the Morningstar Investment Conference in Chicago, Illinois, June 19, 2014. REUTERS/Jim Young

(Reuters) - Saying the billionaire known as the “Bond King” should cease engaging in “reputational warfare,” Pacific Investment Management Co said co-founder Bill Gross’ lawsuit accusing it of driving him out so others could divvy up his bonus should be thrown out.

In papers filed on Monday with a state court in Orange County, California, Pimco and its parent Allianz SE said Gross failed in his $200 million lawsuit to allege that they breached his contract or coerced his Sept. 2014 exit. They also said Gross could have been fired at any time without cause.

Gross’ departure from Newport Beach, California-based Pimco followed months of negative reports about his management style, as well as weak performance at Pimco Total Return, which he had built into the world’s largest bond fund by assets.

“The complaint, parts of which read more like a screenplay than a court pleading, uses irrelevant and false personal attacks on Mr. Gross’s former colleagues in an apparent effort to distract attention from the fundamental failings of these ‘contract’ claims,” the defendants said in Monday’s filing.

“Pimco has moved forward since Mr. Gross’s resignation,” they added. “It is time for him to do the same, instead of treating this court as a forum to engage in the kind of reputational warfare embodied in his legally groundless complaint.”

A hearing is set for March 14, 2016.

Patricia Glaser, a lawyer for Gross, said “we are disappointed” at Pimco’s filing, “but are confident in our case moving forward. Notably, Pimco’s papers do not dispute the substance of Mr. Gross’s allegations in any material way.”

A spokeswoman for Janus Capital Group Inc, where Gross now works, said: “This is a personal matter for Bill and unrelated to Janus.”

In his Oct. 8 lawsuit, Gross said a “cabal” of Pimco executives including Daniel Ivascyn, his successor as chief investment officer, plotted to oust him out of “a lust for power, greed, and a desire to improve their own financial position and reputation.”

He said the ouster deprived him of most of a back-loaded bonus expected to top $250 million in 2014.

Total Return’s assets peaked at $293 billion in April 2013, but have since fallen to below $100 billion.

Gross now runs the roughly $1.4 billion Janus Global Unconstrained Bond Fund. Morningstar Inc said it has underperformed three-quarters of its peers this year. Forbes magazine estimates Gross’ net worth at about $2 billion.

The case is Gross v. Pacific Investment Management Co et al, California Superior Court, Orange County, No. 2015-00813636.

Reporting by Jonathan Stempel and Jennifer Ablan in New York; Editing by Phil Berlowitz

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