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PIMCO's 'Bond King' Quits Amid Reports Of Erratic Behavior


Major news in the world of bond investing today. The man known as the bond king abruptly left the company he founded. Bill Gross built PIMCO into an investing powerhouse, managing nearly $2 trillion in assets. If you pay into a pension fund, odds are some of that money has been in the hands of the bond king. But there've been signs of trouble in Bill Gross's kingdom. And as NPR's Chris Arnold reports, it appears his own company forced him out.

CHRIS ARNOLD, BYLINE: People who work at PIMCO for years now have described Bill Gross as a hard-driving boss. He achieved great success but was demanding, and some said to the point of being brutal. Still, the company maintained a pretty squeaky clean image until earlier this year. Then the first visible crack appeared in the castle wall. Mohamed El-Erian, Gross's high-profile investing partner, himself left the firm after an expletive-filled argument with Gross.

DAVID KOTOK: You had Mohamed El-Erian first. And now you have Bill Gross departing PIMCO. The natural question is what's going on at PIMCO?

ARNOLD: That's David Kotok, the chief investment officer at Cumberland Advisors. We spoke to him this morning as word was just starting to spread that Gross may actually have been pushed out of the company. And people were trying to figure out why.

And is there speculation, you know, is there an element of King Lear out on the Heath that the king is losing his grip?

KOTOK: There's all kinds of speculation. And so we don't know.

ARNOLD: But later this morning, more details started to emerge. A person familiar with the matter told NPR that Bill Gross's behavior had been erratic and that it'd been getting progressively worse. He was clashing with other employees. And at PIMCO'S executive committee finally decided this was now intolerable. The source said that Bill Gross was likely to be fired to by PIMCO today or tomorrow if he didn't step down. And word of that began to spread quickly through the financial press. Here is CNBC.


UNIDENTIFIED REPORTER: Sources familiar with the situation tell me Gross was going to be fired tomorrow by PIMCO. The reason was what they cite as increasingly erratic behavior and a very difficult time dealing with others in the office.

ARNOLD: To be fair, Bill Gross hasn't given his version of events yet. He wasn't available for interviews today. And we should underscore that for years, Bill Gross has been an authoritative and prescient voice on financial markets. Here he is on NPR in 2011 after Congress spooked investors with that fight over the debt ceiling. Gross was urging the government to do something more helpful.


BILL GROSS: What I think government needs to do is to have some direct involvement in terms of job creation whether it's infrastructure, banks. We need to take command here because the private sector basically is discouraged, frightened.

ARNOLD: Also in recent years, PIMCO has stumbled. There have been outflows of capital from the bond fund that Bill Gross manages. PIMCO'S CEO Douglas Hodge says that he's grateful for Gross's contributions but, quote, "it became increasingly clear that the firm's leadership and Bill have fundamental differences." Bill Gross will now be managing a bond fund at Janus Capital Group. Janus says it's proud to welcome him. So it would appear that the bond king has successfully run off to another kingdom. Chris Arnold, NPR News. Transcript provided by NPR, Copyright NPR.

NPR correspondent Chris Arnold is based in Boston. His reports are heard regularly on NPR's award-winning newsmagazines Morning Edition, All Things Considered, and Weekend Edition. He joined NPR in 1996 and was based in San Francisco before moving to Boston in 2001.