Gundlach trail end with mixed verdict

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The normally genteel world of mutual funds was shaken by the courtroom showdown pitting star fixed income manager Jeffrey Gundlach against his former employer Trust Company of the West.

The decision Friday allows both sides to claim victory. Gundlach and three other co-defendants were awarded $66.7 million in past due compensation and the jury found that TCW was unfairly denied compensation for fund management work. The jury also found all four liable for stealing trade secrets, breaching their fiduciary duty to investors and Gundlach liable for interfering with contracts.

Recall that the case was all about Gundlach's attempt to quit TCW and set up a competing firm, Doubleline Capital, and the extent to which he expropriated information and sabotaged his old company in that pursuit. The trial was unusually brutal personally, as it featured all sorts of unflattering personal information about Gundlach that made its way into the media. The twist here is that the jury did not make any awards on the breach and contract claims.

The judge who presided over the case in Los Angeles county court will make a separate decision on damages for the trade secrets issue at a later date. TCW is seeking $89 million in that claim. So it may end up being something of a wash. The judge just might rule that the defendants owe $66.7 million, making the financial tally flat. The New York Times notes that some thought the case might end up being a major decision about what employees can and can't do as they exit companies, but it did end up that way.

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