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Bill Gross and Pimco Settle Lawsuit

Gross, who was pushed out from Pimco in 2014, is donating proceeds from the settlement to charity.

  • Julie Segal

Famed bond manager Bill Gross and Pacific Investment Management Co. have settled a lawsuit over his firing in 2014, allowing Pimco to move on under new leadership.

In a joint statement Monday, Pimco acknowledged the “enormous contribution” that Gross and its other founders and leaders have made to its success as a global asset manager, without disclosing terms of the settlement. The Wall Street Journal reported the firm settled for $81 million, citing people familiar with the matter. A spokesman for Pimco declined to comment.

Gross, now a portfolio manager at Janus Capital, co-founded Pimco in 1971 and turned the firm’s total return bond fund into what was the world’s largest mutual fund before he left. In his 2015 lawsuit, Gross alleged that senior executives, including Mohamed El-Erian, the firm’s former CEO and current chief economic adviser of Pimco parent Allianz, and Dan Ivascyn, the firm’s current chief investment officer, pushed him out to take his share of profits.

Pimco settled the suit so it could move beyond headlines dominated by Gross, two people with knowledge of the matter told Institutional Investor. The firm is now led by Emmanuel Roman, who became Pimco’s new CEO late last year in a move from alternative asset manager Man Group.

Under Gross’s leadership, Pimco, based in Newport Beach, California, increased assets to more than $2 trillion under management. Since his exit, assets have dropped to $1.5 trillion, and according to Morningstar, the Pimco Income Fund now exceeds the size of its total return fund, with $75.4 billion of assets. Pimco Total Return has about $74 billion under management.

The lawsuit “had never been about money,” Gross said in the joint statement, as he’s donating proceeds from the settlement to charity. “Pimco has always been family to me, and, like any family, sometimes there are disagreements,” he said.

Pimco has created a “founders room” at its headquarters, which will include the contributions of Gross, who’s being named director emeritus of the Pimco Foundation, according to the statement. The foundation, which was originally created and funded by Gross, is also establishing an annual “Bill Gross Award” to recognize charitable contributions.