El-Erian clashed with Gross before resigning from Pimco

El-Erian disagreed with Gross over trading strategy, personnel decisions, new products and how Gross interacted with employees.

Feb 25, 2014 @ 12:03 pm

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(Bloomberg News)

Pacific Investment Management Co.'s Mohamed El-Erian clashed with co-founder Bill Gross before announcing last month that he's leaving the firm, the Wall Street Journal reported Tuesday.

Mr. El-Erian, who was Pimco's chief executive and co-chief investment officer, disagreed with Mr. Gross over trading strategy, personnel decisions, new products and how Gross interacted with employees, the newspaper said, citing people familiar with the firm, without identifying them.

In one meeting in June, as the two men clashed over Mr. Gross's conduct, Mr. Gross said he had a “41-year track record of investing excellence,” then asked Mr. El-Erian what he had, according to the newspaper. Mr. El-Erian replied that he was “tired of cleaning up” after Mr. Gross, the newspaper said, citing two people who attended the meeting. Mr. El-Erian later told Mr. Gross he needed to change the way he interacted with people, and Mr. Gross agreed to make adjustments, the Journal reported.

Mr. Gross doesn't like it when employees speak to him on the trading floor or make eye contact, and at times reprimands people for such reasons, the Journal reported, citing the people. He has scolded employees for forgetting to number the pages in their presentations and has given them “communications demerits,” which are tracked to help determine bonuses, the newspaper wrote.

John Brynjolfsson, a former fund manager at Pimco, told the newspaper that Mr. Gross suggested he write a $10,000 check to Pimco's charitable organization after Mr. Brynjolfsson didn't stand during a client tour of Pimco's offices.

COMMON DISAGREEMENTS

Disagreements between Mr. Gross, 69, and Mr. El-Erian, 55, became more common as investors started to pull money, the Journal said. Mr. Gross told traders late last year that he could run Pimco's $2 trillion in managed assets on his own, if Mr. El-Erian would let him, the newspaper wrote.

“For more than 40 years, Pimco has delivered superior results for our clients, consistently and during periods of extraordinary market volatility,” Mr. Gross said in a statement to the Journal at the time. “We hold ourselves to the highest standards of excellence and performance, and I ask of others only what I demand of myself: hard work, dedication and intense focus on putting our clients first.”

Mr. Gross also restricted trading last summer during difficult market conditions, mostly to sales to meet client redemptions, the Journal reported.

(Bloomberg News)

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