UPDATE 4-U.S. probes data theft in Gundlach-TCW split
* Gundlach's new and old firms cooperating in probe
* U.S. grand jury probes property theft allegations
* U.S. Justice Department declines to comment (Adds late statement from DoubleLine)
By Ross Kerber and Aaron Pressman
BOSTON, Dec 8 (Reuters) - U.S. investigators are probing whether star bond fund manager Jeffrey Gundlach stole trade secrets in a bitter split-up with his former employer, Trust Co of the West.
Current and former employees of Gundlach's new firm, DoubleLine Capital LP, have been questioned in connection with a federal grand jury inquiry, DoubleLine disclosed in a Dec. 6 routine regulatory filing.
DoubleLine "has cooperated with the inquiry and has voluntarily produced documents," the Los Angeles-based firm said in the filing.
TCW, which fired Gundlach last December, said the criminal probe grew out of its allegations that Gundlach and his colleagues stole proprietary trade secrets before they left. TCW, a unit of French bank Societe Generale (SOGN.PA), is also cooperating fully with the investigation, the firm said in a statement on Tuesday.
"As the victim, TCW is cooperating fully with the government and is not the subject of the investigation," the Los Angeles firm said in a statement.
In a statement on Wednesday evening, DoubleLine said further that TCW is "blatantly mischaracterizing the facts" regarding the inquiry and called for a full investigation of TCW's conduct as well.
The investigation comes in the midst of dueling lawsuits between DoubleLine and TCW over Gundlach's firing and the creation of DoubleLine.
TCW is seeking damages of at least $200 million and possible ownership of DoubleLine, while Gundlach alleged he and his colleagues are owed as much as $1.25 billion in unpaid bonuses.
A trial is scheduled to begin in July.
Gundlach, who started at TCW in 1985, was the top-performing bond fund manager over the decade before he was fired, overseeing about $100 billion. Amid disputes over compensation and leadership appointments, Gundlach and some of his colleagues became increasingly at odds with TCW's senior management. [ID:nN19215863]
When TCW fired Gundlach, a onetime Morningstar bond manager of the year, it alleged he was about to start a rival firm. Days later, Gundlach opened DoubleLine, staffed with other former employees of TCW.
TCW then sued DoubleLine, alleging Gundlach stole proprietary information, lied to clients and kept drugs and pornographic materials in his office.
In the complaint, TCW said it found evidence several of Gundlach's colleagues who joined him at DoubleLine spent weeks downloading investment positions, analytical software and proprietary information about clients to portable computer drives.
Gundlach denied any impropriety and counter-sued, saying he and his team were owed $600 million to $1.25 billion in performance bonuses.
Many investors have ignored the controversy and invested with Gundlach's new firm, despite the lawsuits. DoubleLine's mutual funds have attracted almost $3.2 billion in net inflow from investors this year through the end of November, according to Lipper, a unit of Thomson Reuters.
In the statement late Wednesday DoubleLine said it has attracted $7 billion in assets and commitments in all. The company's results, Gundlach said in the statement, are proof of the false nature of TCW's claim and challenged TCW to identify a single trade secret DoubleLine is using. Such an attempt, he said, would "provide significant comedy and be the object of derision at every trading desk in America."
DoubleLine disclosed in April that an employee had been interviewed "by a government agency" but made no mention of a federal grand jury, usually formed to consider criminal charges. A spokesman for the company said it was obliged to make the new filing because of recent TCW legal claims.
A Justice Department spokeswoman declined to comment on the probe. (Reporting by Ross Kerber and Aaron Pressman; Editing by Lisa Von Ahn, Gerald E. McCormick, Andre Grenon and Steve Orlofsky)
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