July 28, 2011 / 8:30 PM / in 8 years

UPDATE 1-TCW plotted to fire Jeffrey Gundlach -- attorney

* Opening statements begin in high stakes trial

* TCW sued former employee Gundlach over trade secrets

* Gundlach counter-sued over wages

* Trial expected to last 5-8 weeks (Rewrites with Gundlach attorney’s opening statement)

By Mary Slosson

LOS ANGELES, July 28 (Reuters) - Trust Company of the West plotted to fire its former chief investment officer, Jeffrey Gundlach, for months before pulling the trigger, an attorney for Gundlach said in court on Thursday.

Gundlach, known as the “king of bonds,” faces his former employer in a trial that could be worth hundreds of millions of dollars for the winner. Attorneys for both sides delivered opening statements on Thursday.

Upset over Gundlach’s perceived insubordination, top TCW executives devised a secret plan — dubbed “Project G” — to replace the bond market expert and keep his clients, Gundlach attorney Brad Brian told jurors.

“They knew they were going to lose business,” Brian said, so they “came up with a scheme to lie to him so they could try to keep as much of that business as possible.”

TCW attorneys, meanwhile, said Gundlach tried to steal a business worth hundreds of millions of dollars after he failed to become the head of TCW, according to TCW attorney John Quinn.

“This was an inside job,” Quinn told jurors.

“Even though he was so highly paid, you are going to hear he was bitter, he was unhappy, he wanted more power, he wanted more money. He wanted to be CEO,” Quinn said.

TCW fired Gundlach, its former chief investment officer, in late 2009. In the following weeks, Gundlach set up his own asset management firm, DoubleLine Capital, and roughly 40 TCW employees who had worked under him migrated to the new firm.

TCW sued him shortly thereafter for theft of trade secrets and creating unfair competition, among other allegations.

Gundlach counter-sued, alleging TCW owed him wages. TCW is a unit of French bank Societe Generale (SOGN.PA).

The hot, six row courtroom was packed on Thursday morning with attorneys and reporters. Gundlach, wearing a medium grey pinstriped suit, sat in the crowd a row behind TCW Chief Executive Marc Stern.

At one point Quinn said Gundlach liked to be called “The Godfather,” prompting Gundlach to shake his head and chuckle.

Gundlach controlled 60 percent to 70 percent of the assets managed by TCW, Brian said, making over $1 billion for TCW during his time there. DoubleLine only had four to five clients for its first five months of existence, Brian said.

Yet Quinn said Gundlach stole so many trade secrets and confidential information that, if you printed it out, it would be 2-1/2 times the height of the Empire State building.

“TCW owes Mr. Gundlach nothing.” Quinn said, because Gundlach and his co-conspirators had “plotted the destruction of TCW.”

The case is being argued before a 12-person jury and is expected to last five to eight weeks.

The case in Superior Court of California, County of Los Angeles is Trust Co of the West v. Jeffrey Gundlach et al, BC429385. (Editing by Dan Levine, Tim Dobbyn and Andre Grenon)

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