L.A. money manager TCW Group today filed a lawsuit against its former chief investment officer, Jeffrey Gundlach, accusing the star bond fund manager of conspiracy, unfair competition and theft of proprietary TCW information.

TCW, which fired Gundlach on Dec. 4, says in the suit (a PDF copy is here) that he had become “unfit” to remain a senior officer, citing behavior that had become “erratic” and “increasingly and openly confrontational.”

The suit says that on the day TCW fired him, the firm found “inappropriate contraband” in his offices, “consisting of marijuana, drug paraphernalia . . . and a collection of 12 sexual devices, 34 hardcore pornographic magazines and 36 hardcore sexually explicit DVDs and videocassettes.”

A spokesman for Gundlach and his new firm, DoubleLine Capital, said Gundlach had no immediate comment, pending review of the suit.

[UPDATE: DoubleLine issued a statement calling the suit "meritless" and accusing TCW of using "gutter" tactics. More here.]

The 50-year-old Gundlach, considered one of Wall Street’s sharpest investors in mortgage-backed bonds, had been chief investment officer at TCW since 2005 and was a 24-year veteran of the firm.

TCW, which manages more than $100 billion in assets, said it terminated Gundlach because he had threatened to leave and take his staff with him. Gundlach has said that the firm’s French parent, bank titan Societe Generale, was intent on firing him after he sought more say-so on TCW’s future.

Gundlach last month formed his own firm, DoubleLine, with backing from another L.A. money management titan, Oaktree Capital Management.

About 40 people on Gundlach’s 65-member bond team at TCW have since followed him to DoubleLine, which began operations on Dec. 14.

TCW also has faced huge cash outflows from its flagship mutual fund, TCW Total Return Bond, which had been managed by Gundlach.

TCW’s suit, filed in state Superior Court, alleges that Gundlach “conspired while at TCW to steal confidential and proprietary TCW information” and has “solicited business from [TCW clients] by making false statements about TCW and its capabilities.”

Gundlach and certain associates also named in the suit "secretly organized DoubleLine back in October 2009 and laid the groundwork for its launch," TCW says. "That groundwork included wholesale theft of vast quantities of TCW proprietary information," the firm alleges.

-- Tom Petruno

Photo: Jeffrey Gundlach. Credit: Alex Gallardo / Los Angeles Times