TCW and Jeffrey Gundlach reach settlement

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Star bond trader Jeffrey Gundlach and his former employer, TCW Group Inc., have agreed to settle a lawsuit over allegations that he stole trade secrets to set up his own firm. Both sides announced the deal late Thursday but did not disclose terms.

Gundlach was found liable in September for breaching his fiduciary duty to TCW, which fired him in December 2009. But in what essentially was viewed as a win for Gundlach, the Los Angeles jury found no harm to TCW in that breach and awarded the firm no financial compensation.

Furthermore, the jury found that TCW must pay $66.7 million to Gundlach and his three codefendants for failure to pay wages owed them before leaving the money-management firm to set up a rival company in 2009.

Both sides were still battling over TCW’s claim that Gundlach had misappropriated the company’s trade secrets, causing harm to TCW. Any damages on that claim were to be decided by a judge, though TCW was asking for $89 million.

TCW, which manages about $120 billion in assets for clients, fired Gundlach in December 2009 in a shake-up that rocked the mutual-fund world. One month later the company sued Gundlach, alleging that he and key aides conspired against the firm and stole TCW proprietary information to set up a new fund-management business, DoubleLine Capital, almost overnight.

Gundlach, 51, then countersued and accused TCW, the parent of Trust Co. of the West, of ousting him after 24 years at the firm to cheat him out of a huge chunk of promised income.

The two lawsuits were combined into one trial, which began in late July and was closely watched on Wall Street.

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-- Joe Bel Bruno