Earlier today, it was reported that the Securities and Exchange Commission has been "investigating whether bond fund manager Pimco inflated the returns of its Total Return Exchange-Traded Fund run by founder Bill Gross." The probe is said to have sped up in recent weeks but has been going on for "at least a year." Which means that it was happening when Mohamed El-Erian announced he was leaving the firm. Which means that it's possible not all but some of Bill Gross's behavior surrounding El-Erian's departure could be attributed to stress related to the look-see by the SEC, a theory we decided to explore further. Our findings:
* Enforcing total silence on the trading floor with the expectation that Pimco employees will neither speak to, look at, or breathe in his general direction: Gross has long been known to run the trading floor at Pimco with a "Before you even think to open your mouth, shut the fuck up" policy. This was not a new development. Survey says: can't be blamed on the investigation.
* Telling traders at the end of last year, "...if only Mohamed would let me, I could run all the $2 trillion myself...I'm Secretariat...why would you bet on anyone other than Secretariat?": One the one hand, the argument could be made that, in light of the investigation, Gross was preemptively putting it out there that he can post the sort of returns that are so impressive it might look like they were inflated but aren't. On the other, it's highly possible he's internally referred to himself as Secretariat for decades (while shaving in the morning, getting himself pumped up before a big trade, etc) and only just mentioned it aloud that day. Survey says: Inconclusive.
* Making people write $10,000 for sitting when Bill Gross thought they should've been standing: On the one hand, given everything we know about him, the sitting vs. standing sound like exactly the sort of thing that would set him off. On the other, it's possible that while in times past, he would've simply shot the offending sitter an absolutely terrifying death stare, it was the stress of the investigation that pushed him to force the employee to drop 10-large. Survey says: Let's give this one to the probe.
* Slashing people's bonuses for the most minor offenses, like failing to have a "p.33" on slide 33 of a presentation: This seems like an institutionalized thing that's gone on for a while...but maybe he was trying to save money for potential legal fees? : We think Vintage Bill Gross but we'll throw this one to the audience to decide.
* Penning an Investment Outlook that included the lines "There’s nothing like a good sneeze; maybe a hot shower or an ice cream sandwich, but no – nothing else even comes close. A sneeze is, to be candid, sort of half erotic, a release of pressure that feels oh so good either before or just after the Achoo! The air, along with 100,000 germs, comes shooting out of your nose faster than a race car at the Indy 500. It feels sooooo good.": Like we said at the time, this is nothing if not typical Gross. Survey says: He was writing stuff like this long before the SEC came along.
* Calling up reporters at Reuters and demanding they write that a Journal article that portrayed Gross in a not so great light was actually ghost written by El-Erian, whose phone lines Gross suggested he'd been tapping: This is actually insane so... Survey says: For his sake, let's give this one to the probe.
* Describing himself as a 70 year-old Justin Bieber: After going back and forth for hours on this one we've decided...Survey says: IT COULD EASILY GO EITHER WAY.
Pimco ETF Draws Probe by SEC [WSJ]
SEC probes Pimco chief Bill Gross's ETF bond fund [Reuters]
Pimco Cooperating in SEC Probe of Gross’ Total Return ETF [Blooomberg]
S.E.C. Is Examining Pimco Exchange Traded Fund [Dealbook]