Tags: Tension | Bill Gross | Mohamed El-Erian | Pimco Departure

WSJ: Tension With Gross Helped Spark El-Erian's Departure From Pimco

By    |   Tuesday, 25 February 2014 12:28 PM

When Pimco announced last month that CEO Mohamed El-Erian would leave the firm in March, it was presented as an amicable departure by all sides.

But behind the scenes, there was discord between El-Erian and Gross, interviews with more than 20 people close to the two finance titans indicate, according to The Wall Street Journal.

Last summer, when the bond market was falling, leading to big losses for Pimco, Gross turned more combative than usual, his colleagues tell the Journal. He was openly arguing with El-Erian, which had been a rare occurrence.

Editor’s Note: These 38 Dates Are Key to Bagging $313,038

In June, the duo had the following exchange in front of co-workers as El-Erian criticized Gross over his conduct, two people who were there tell the Journal.

"I have a 41-year track record of investing excellence," Gross told El-Erian. "What do you have?"

"I'm tired of cleaning up your s—," replied El-Erian, referring to behavior by Gross that he thought was damaging Pimco.

During that difficult period for the company, Gross and El-Erian increasingly clashed over portfolio strategy, personnel decisions, new products and other issues, employees tell the Journal.

Recently, Gross has said his firm is stronger now following the leadership changes triggered by El-Erian’s resignation on Jan. 21.

“I think we’re a better company now than we were a month ago and that is a big statement,” Gross said in an interview on Bloomberg TV’s “Market Makers.”

In a reorganization last month following El-Erian's departure announcement, Pimco named four deputy chief investment officers.

"Going forward there will be more focus on strategy and markets rather than policy, and these are the people on the front lines of strategy and alpha," Gross told Bloomberg. "You can’t just do what you want, but you will be able to react to markets a little quicker rather than wait for the investment committee to meet at noon."

Meanwhile, Gross has repeatedly tried to soothe worried Pimco clients.

In a letter posted earlier this month on Pimco's website, Gross said: "We will take turns chairing our daily meetings, which will allow for greater focus on certain sectors and regions. I also find that I often prefer to sit at the side of the table rather than at the head of it. I can contribute more effectively that way, learn more by listening, and it gives others the opportunity to lead."

Pimco observers considered the letter a response to clients who have grown edgy about the unexpected changes and Pimco's recent investment calls, Reuters reported.

"I think Pimco did this because they were caught totally off guard by Mohamed leaving," Morningstar senior research analyst Eric Jacobson told Reuters. "My impression is that they've been getting tremendous blowback from their clients, and now they are responding publicly."

Editor’s Note: These 38 Dates Are Key to Bagging $313,038

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When Pimco announced last month that CEO Mohamed El-Erian would leave the firm in March, it was presented as an amicable departure by all sides.
Tension,Bill Gross,Mohamed El-Erian,Pimco Departure
Tuesday, 25 February 2014 12:28 PM
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