Trust Company of the West, the California-based mutual fund and unit of the French bank Societe Generale has announced that they have settled a lawsuit with its former star investor, Jeffrey Gundlach, ending one of the year’s most bitter and protracted disputes. TCW sued Mr. Gundlach, its former chief investment officer, in 2010 for hundreds of millions of dollars in damages, accusing him and several associates of stealing trade secrets and breaching their fiduciary duty in order to set up a competing firm after he was fired from TCW in 2009. Mr. Gundlach countersued, arguing that he was entitled to hundreds of millions of dollars in lost fees from the funds he oversaw at TCW. More than 40 TCW employees eventually followed Mr. Gundlach to  his new firm, DoubleLine Capital. A six-week trial ensued this summer, during which attorneys for TCW tried to paint Mr. Gundlach, a closely watched figure in fixed-income investing who has referred to himself as “the Pope” and “the Godfather,” as a self-centered renegade who was bent on sabotaging the firm. DoubleLine’s legal team tried to show that Mr. Gundlach’s ouster was the result of a long-held vendetta by trade secrets, Marc Stern the firm’s chief executive, and other firm officials. In September, a Los Angeles jury gave a mixed verdict in the civil case that awarded Mr. Gundlach and three associates $66.7 million in damages in the countersuit, while finding them liable for breaching their fiduciary duty to TCW and misappropriating trade secrets. Thursday’s settlement will essentially override the jury’s verdict, which had yet to be finalized by a judge.  The terms of the settlement were not disclosed, and the firms said in statements that they would not discuss it further.  [Dealbook - 12/30/11]

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