Pimco on defensive after report that Gross threatened to quit

Report was slammed by Pimco, which has faced more than a year of investor withdrawals

Jul 15, 2014 @ 8:34 am

By Trevor Hunnicutt

Pimco said late Monday it continues to stand by its beleaguered co-founder, William H. Gross, after a news article reported the legendary bond manager threatened to resign after clashing with executives.

The Wall Street Journal reported Monday night that Mr. Gross threatened to quit Pacific Investment Management Co. more than once after conflict with other top executives at the firm.

Some of the executives had warned the manager of the world's largest bond fund not to make divisive comments to the press after the departure earlier this year of former chief executive Mohamed A. El-Erian, according to the Journal, which cited “people familiar with the matter.”

The report was almost immediately slammed by Pimco. Mark Porterfield, a spokesman for the Newport Beach, Calif., fund house, wrote in an e-mail that the “article is full of untruths and mischaracterizations that are unworthy of a major news daily.”

Mr. Porterfield continued: “We stand by Bill Gross as Pimco's founder, chief investment officer and future investment leader.”

Pimco declined to comment further in response to a series of questions from InvestmentNews.

The Journal described a heated clash in June in which Mr. Gross challenged Douglas M. Hodge, the CEO, for not knowing more about the company's sales strategy and efforts to retain clients.

The report also said Mr. Gross was warned by a group of executives to “avoid inflammatory public comments” after an April appearance on Bloomberg TV in which he encouraged Mr. El-Erian to explain his departure.

Mr. El-Erian is, reportedly, contractually precluded from making such a public explanation.

The report compounded an onslaught of media attention that has followed Mr. El-Erian's unexpected departure, which reportedly followed clashes with Mr. Gross, as well as lagging recent performance of the firm's flagship Total Return Fund (PTTAX). Advisers and other investors have said those factors have contributed to their decisions to withdraw money from the firm.

The fund suffered its 14th consecutive month of outflows last month, to the tune of about $60 billion over the last year, bringing it to $225 billion in assets, according to research firm Morningstar Inc.

The Journal article also brought fresh attention to the manner of Mr. Gross, who has been described, in turn, as brilliant, reflective, mercurial and odd.

The star portfolio manager attracted attention after wearing sunglasses at an indoor conference held in Chicago last month by Morningstar.

At that event Mr. Gross said the new organizational structure at the firm — set up after Mr. El-Erian's departure — is working well and that he's “never been happier at work.” He also said the fund is not getting enough attention for what he has called the performance “turnaround” of Pimco Total Return.

One day later, according to the Journal, he told staff in New York that he wished he could “do it over again.”

“I wouldn't have worn the sunglasses,” he said, according to the newspaper.

0
Comments

What do you think?

View comments

Recommended for you

Featured video

Gadget Girl

Gadget Girl: The case of demystifying workflows

For today's case, Gadget Girl infiltrates Redtail U to find out how they have flipped the script on process and workflows by creating a great training program for advisers and their support staff.

Latest news & opinion

Nontraded BDC sales in worst year since 2010

The illiquid product's three-year decline is partially due to new regulations and poor performance.

Tax reform debate sparks fresh interest in donor-advised funds

Schwab reports new accounts up 50% from last year, assets up 33%.

Nontraded REITs to post worst sales since 2002

The industry is on track to raise just $4.4 billion, well off the $19.6 billion it raised just four years ago, as new regulations hinder sales.

Broker protocol for recruiting a boon for clients

New research finds advisers whose firms have joined the agreement take better care of customers.

Meet our 2017 Women to Watch

Introducing 20 female financial advisers and industry executives who are distinguished leaders, advancing the business of providing advice through their creativity and hard work.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print