“Bond King” Bill Gross is suing his former employers at Pimco for US$200m (£130m), claiming he was forced out by colleagues who had a “lust for power”.
The lawsuit sets out Mr Gross’s claim for wrongful dismissal from the company he founded in 1971, where he ran Pimco Total Return until his departure last year.
Mr Gross, who has since joined Janus Capital Group, said some of his colleagues were “driven by a lust for power, greed, and a desire to improve their own financial position and reputation at the expense of investors and decency.”
It was also claimed they wanted to force him out and claim his 20 per cent stake in the bonus pool.
Mr Gross, who is now running the Janus Global Unconstrained Bond fund, claimed he resisted attempts to offer the more lucrative but riskier products favoured by some of his colleagues, including his deputy Mohamed El-Erian, who has also left Pimco.
According to Morningstar analyst Eric Jacobson, Pimco Total Return was once the largest mutual fund in the world, but has shrunk considerably since Mr Gross’s departure.
He said the fund recently slid under the US$100bn (£65bn) mark as combined outflows from 1 September 2014, through to August 2015 totalled roughly US$124bn (£80bn).
Mr Jacobson said: “Those redemptions have abated some – the US$2bn (£1.3bn) that left in August 2015 was the lowest monthly figure since Mr Gross resigned – and it should not be hard for a firm with Pimco’s significant resources to manage at that level.
“But the outflows have not yet stopped, much less reversed.”
Right to reply
A spokesman for Pimco said: “This lawsuit has no merit and our legal team will be responding in court in due course. Our focus remains on our clients and their investment portfolios.”
A spokesman for Allianz, Pimco’s parent company, said: “From a factual perspective, Bill Gross terminated his position at Pimco and immediately moved to a competitor in September 2014.
“This development was first disclosed to Pimco by media reports.
“We will not comment on the allegations contained in the complaint other than that the lawsuit has no merit.”
