Judge Allows DoubleLine Capital to Operate Pending Trial

January 21, 2011

The judge presiding over the legal battle between L.A. money managers TCW Group Inc. and DoubleLine Capital has thrown out TCW’s attempt to effectively shut down DoubleLine’s mutual funds pending a trial.

L.A. County Superior Court Judge Carl West denied TCW’s request that the court create a trust that could lay claim to gains generated by the DoubleLine funds.

TCW, which has $115 billion of assets under management, fired star bond fund manager Jeffrey Gundlach in December 2009, saying he had threatened to leave and take his staff with him.Within two weeks of his termination Gundlach set up DoubleLine, and about 40 members of his 65-member bond team at TCW quickly left to join him.

TCW then sued Gundlach, alleging that he stole “vast quantities of TCW proprietary information” before his ouster, charges that Gundlach has denied. In turn, Gundlach countersued TCW, alleging that the firm sought to oust him to avoid having to share up to $1.25 billion in fees from assets he had managed.

With the initial case scheduled for trial in July,2011, in December, 2011 TCW filed a second suit, aiming at the trustees of the DoubleLine mutual funds. That case included the request to claim earnings of the funds, which have attracted $4.5 billion in assets since their April launch. DoubleLine competes directly with TCW's bond funds and funds of other industry giants such as Pimco.

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Investment Advisers, Investment Companies, Judicial, Mutual Funds