I a J 4 ) 6 8 9 l0 DAVID G. SPIVAK, SBN 179684 THE SPIVAK LAW FIRM 9454 Wilshire Blvd. Suite 303 Beverly Hills, CA902l2 Telephone (310) 499-4730 Facsimile Email (310) 499-4739 david@spivaklaw.com PHILIP M. AIDIKOFF, SBN 65014 AIDIKOFF, UHL & BAKHTIARI 9454 Wilshire Blvd. Suite 303 Beverly Hills, CA902l2 Telephone (310) 274-0666 Facsimile (310)859-0513 pma@aublaw.com Email 1l 12 Attomeys for Plaintiff, JASON WILLIAMS l3 IN THE SUPERIOR COURT FOR THE STATE OF CALIFORNIA ANLIMI TED JARISDICTION t4 t5 COUNTY OF ORANGE t6 17 JASON WILLIAMS. l8 Plaintffis), 19 v. 20 2l 22 PACIFIC INVESTMENT MANAGEMENT COMPANY LLC, a Delaware limited liabilitv company; and DOES I through 25, inclusive, Case No.: COMPLAINT FOR: l. 2. Wrongful Termination in Violation of Public Policy; and Violation of Labor Code g 1102.5 Defendant(s). 23 24 25 26 27 28 l' Plaintiff JASON WILLIAMS ("Williams" or "Plaintiff') is a36 yearold man who at all relevant times resided in the Eastvale, Riverside County, Califomia. At all relevant times, Williams was an o'employee" within the meaning of Title 8 California Code Williams v. PIMCO of I Regulations Section 11050 and an "aggrieved employee" within the meaning of Labor Code Section 2699(c). 2 J 2. DEfENdANt PACIFIC INVESTMENT MANAGEMENT COMPANY LLC ("PIMCO") is a limited liability partnership organized and existing under the laws of the State 4 Delaware. At all relevant times, PIMCO maintained its headquarters and operated in Newport 5 Beach, Orange County, California. PIMCO is an investment management company and one 6 the largest mutual fund money managers in the world. 7 3. Plaintiff sues fictitious defendants Does 1 of through 25, inclusive, each of which it of the State of Califomia, pursuant to Code of Civil Procedure Section 474,becatse 8 a resident 9 their names and/or capacities and/or facts showing them liable are not presently known. Plainti l0 ll 12 l3 t4 is informed and believes and thereon alleges that each of said Doe Defendants is responsible legally in some manner for the damages and injuries mentioned in the complaint. 4. Unless otherwise indicated, each named defendant is sued as the agent and/or employee of every other named and doe defendant acting within the course and scope of said agency and/or employment, with the knowledge and/or consent of said co-defendants. 5. In October of 2000, Defendants hired Williams. Defendants employed him at l5 various times as an operations associate and as a trading assistant to work from its headquarters l6 in Newport Beach, CA. In May of 2005, Defendants promoted Williams to a portfolio manager l7 position in its High Yield group. Defendants were at all times satisfied with his work l8 performance and even proposed that he mentor less experienced portfolio managers. l9 20 2l 22 6. Beginning in mid-2008, Williams noticed, documented, objected to and reported to Defendants' management, compliance officers and his supervisors, including Chris Dialynas, misconduct involving senior managers. Such misconduct included the following: a. In December of 2008, a senior manager directed Williams to arbitrarily elevate the rating a PIMCO analyst had assigned to a bond in order to place the bond in funds 23 that had a higher rating requirement; 24 b. In April of 2009, a senior manager stated on a television program that he 25 was extremely optimistic about Bank of America credit while PIMCO was simultaneously 26 aggressively selling Bank 27 28 c. of America convertible preferred securities; In 2008, market manipulation and breach of fiduciary duty to PIMCO clients in connection with a convertible prefened security, issued in the primary market, in whic Williamsv. PIMCO I a senior manager allocated away from other PIMCO clients after the equity market had opened and the convertible preferred was trading up around 2 d. l0% inthe secondary market; In August of 2008, senior management intentionally violated PIMCO J prospectus for a Convertible Bond Fund; 4 5 e. In August of 2008, breach of fiduciary duty to client by ignoring client request to purchase a significant position in a PIMCO Convertible Bond Fund; f. 6 Between or around late 2008 and early 2009, senior management directed the intemal transfer of illiquid securities, securities that had been arbitrarily overvalued, from the 8 PIMCO PARS hedge fund to other PIMCO funds, to the detriment of the holders of the receivin 9 funds: g. l0 ll In or around late November or early December, 2008, attempted unlawful trading on inside information involving stock in El Paso Corporation; h. t2 In or around January of 2012, short-selling a High Yield CDX 17 to the disadvantage of other PIMCO clients who did not receive their pro rata share of their allocation l3 which had been the standard for the previous month plus; and t4 l5 i. Total Return Fund, an exchange traded fund. 7. l6 t7 20 In response to Williams's objections, Defendants' managers arbitrarily reduced Williams's compensation and subjected him to verbal abuse. 8. l8 t9 In or around March of 2012, artificial manipulation of the price a PIMCO In December of 201l, Williams reported the conduct described above to Special Agent Norman Embry and two other special agents of the U.S. Department of the Treasury Office of the Special Inspector General for the Troubled Asset Relief Program ("SIGTARP"). 9. 2l On February 17,2012, Williams notified Robin Nabors, a Defendants' Human Resources representative, of his complaints to SIGTARP and his cooperation in the agency's 22 investigation. Soon after, Williams notified PIMCO's counsel of his communication with federal 23 agents. 24 10. On March 6,2012, approximately three weeks after Williams notified Defendants 25 of his complaints to the federal agents, Defendants terminated his employment because of his 26 disclosures to a federal law enforcement agency and for his cooperation in the investigation that 27 arose from it. The individuals who terminated Williams's employment were aware of his 28 complaints of Labor Code violations outlined above. As a pretext, Defendants advised Williams lVilliams v. PIMCO I that he was terminated for "performance reasons" even though his work performance had been satisfactory. 2 11. The acts taken toward Plaintiff were carried out by and/or ratified by Defendants J and/or managing agent employees of Defendants acting in a despicable, oppressive, fraudulent, 4 ) 6 7 malicious, deliberate, egregious, and inexcusable manner in order to injure and damage Plaintiff, thereby justiffing an award to him of punitive damages in a sum appropriate to punish and make an example of Defendants, and each of them. 12. As a proximate result of the wrongful acts of Defendants, and each of them, 8 Plaintiffhas been harmed in that Plaintiff has suffered actual, consequential and incidental 9 financial losses, including without limitation, loss of salary and benefits, loss of future earning l0 ll t2 l3 t4 potential and wages, and the intangible loss of employment-related opportunities for growth in his field and damage to her professional reputation, all in an amount subject to proof at the time of trial. Plaintiffclaims such amounts as damages together with prejudgment interest pursuant to Civil Code Sections 3287 andlor $ 3288 and/or any other provision of law providing for prejudgment interest. 13. As a proximate result of the wrongful acts of Defendants, and each of them, l5 Plaintiffhas suffered and continues to suffer anxiety, wolry, embarrassment, humiliation, mental t6 anguish, and emotional distress. Plaintiffis informed and believes and thereon alleges that he t7 will continue to experience said emotional suffering for a period in the future l8 presently ascertain, all in an amount subject to proof at the time of trial. FIRST COUNT FOR RELIEF t9 20 2l 22 she cannot WRONGFUL TERMINATION IN VIOLATION OF PUBLIC POLICY (Against all Defendants) 14. Plaintiff incorporates by reference each and every paragraph of this Complaint as if fully alleged herein. 15. The state statutes recited above embody fundamental, substantial, and well- 24 established public policies of the United States and State of California. By terminating Plaintiff, 25 Defendants violated these fundamental, substantial, and well-established public policies: 26 a. Section 10(b) of the Securities Exchange Act of 1934 states: 27 28 Complaint It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce or of the mails, or of any facility of any national securities exchange [. . .] I 2 (b) To use or employ, in connection with the purchase or sale of any security registered on a national securities exchange or any security not so registered, or any securitiesbased swap agreement (as defined in section 2068 of the Gramm-Leach-Bliley Act), any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors. 3 4 5 6 7 1s 8 u.s.c. $ 78j(b). b. SEC Rule 10b-3 states: 9 l0 (a) ll t2 It shall be unlawful for any broker or dealer, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails, or of any facility of any national securities exchange, to use or employ, in connection with the purchase or sale of any security otherwise than on a national securities l3 exchange, any act, practice, or course of business defined by the Commission to l4 be included within the term "manipulative, deceptive, or other fraudulent device or contrivance", as such term is used in section l5(c)(l) ofthe act. l5 t6 (b) t7 l8 t9 'omanipulative, deceptive, or other fraudulent device or contrivance," as such term is used in section l5(c)(l) ofthe act. 20 2l 17 C.F.R. tt240.10b-3. c. 22 23 24 It shall be unlawful for any municipal securities dealer directly or indirectly, by the use of any means or instrumentality of interstate cortmerce, or of the mails, of any facility of any national securities exchange, to use or employ, in connection with the purchase or sale of any municipal security, any act, practice, or course of business defined by the Commission to be included within the term SEC Rule 10b-5 states: "It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails or of any facility of any national securities exchange, 25 26 1. To employ any device, scheme, or artifice to defraud, 27 2. To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or 28 lVilliams v. PIMCO I 2 3. To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person, in connection with the purchase or sale of anv securitv." J 4 17 C.F.R. fl 240.10b-5. Trading a security while in possession of material nonpublic information in violation of a duty to withhold the information or refrain from trading, commonly known as 5 unlawful insider trading, violates Section 10(b) and SEC Rule 10b-5. 6 c. It is unlawful for an issuer or any person who is an offtcer, director or controlling person of an issuer or any other person whose relationship to the issuer gives him 8 access, directly or indirectly, to material information about the issuer not generally available to 9 the public, to purchase or sell any security of the issuer in this state at a time when he knows l0 material information about the issuer gained from such relationship which would significantly ll affect the market price of that security and which is not generally available to the public, and t2 which he knows is not intended to be so available, unless he has reason to believe that the person l3 selling to or buying from him is also in possession of the information. Corp.Code $ 25402. l4 l5 t6 t7 d. Under the Sarbanes-Oxley Act of 2002 ("SOX"), an employer whose securities must be registered under federal securities laws (i.e., publicly-traded stocks or bonds) may not discharge, discriminate or retaliate against an employee for reporting employer conduct o'reasonably believes" violates federal securities laws or for assisting an SEC that the employee investigation. 18 U.S.C. $ l5l4A. SOX protects an employee who reports information to a l8 supervisor "regarding any conduct which the employee reasonably believes" constitutes certain t9 Securities Act violations (e.g., mail fraud, wire fraud, bank fraud, securities fraud, a violation 20 any rule or regulation of the SEC or any provision of federal law relating to fraud against 2l shareholderc). Allen v. Administrative Review Bd. (sth Cir. 2008) 514 F.3d 22 Asdale v. International Game Technologt (9th Cir. 2009) 577 F.3d989'996-997. 23 24 e. of 468,476477; Van Under the Dodd-Frank Wall Street Reform and Consumer Protection Act ("WSRCPA"), tto employer may discharge, demote, suspend, threaten, harass, directly or indirectly, or in any other manner discriminate against, a whistleblower in the terms and 25 conditions of employment because of certain types of protected conduct, including violations 26 27 the securities laws and making disclosures that are required or protected under the Sarbanes- Oxley Act of 2002. ls U.S.C. $ 78u-6(h)(1XA). 28 Ililliams v. PIMCO of f. I 2 J 4 act. Lab.Code $ 2856. g. All persons have the right to report crimes to the police, the local prosecutor, or an appropriate regulatory agency, even if the report is made in bad faith. Civ. Code $ 47. ) 6 An employer has no authority to direct an employee to commit an illegr h. No employer shall prevent an employee who reasonably believes that violation of or noncompliance with laws or regulations has occurred from informing a government or law enforcement agency about the violation or noncompliance. Lab.Code 8 ll l2 l3 l4 i. An employer may not retaliate against an employee for disclosing information to a government or law enforcement agency, where the employee has reasonable cause to believe that the information discloses a violation of state or federal statute, or a vio or noncompliance with a state or federal rule or regulation. Lab.Code $ I102.5(b). j. An employer may not retaliate against an employee for refusing to participate in an activity that would result in a violation of state or federal statute, or a violation or noncompliance with a state or federal rule or regulation. Lab.Code $ 1102.5(c). 16. l5 t6 $ 1102.5(a). 9 l0 a WHEREFORE, Plaintiffseeks judgment against Defendants, and each of them, for: (A) t7 All actual, consequential and incidental financial losses, including but not l8 limited to loss of earnings, according to proof, together with prejudgment interest pursuant to l9 Civil Code Section 3287 and/or 3288; (B) 20 2l General damages in a sum in excess of the jurisdictional minimum of the Superior Court; (C) Punitive damages in a sum in excess of the jurisdictional minimum of the 22 Superior Court; 23 24 (D) any other provision allowed by law; (E) 25 26 Expert witness fees pursuant to Code of Civil Procedure $ 998, or any other provision allowed by law; (F) 27 28 Attorneys' fees pursuant to Code of Civil Procedure Section 1021.5, or and Prejudgment interest pursuant to Code of Civil Procedure Section 998 Civil Code $ 3287(a); Williamsv. PIMCO (G) (H) I Costs of suit; and Such other and further relief as the court deems proper. 2 SECOND COUNT FOR RELIEF J vroLATroN oF LABOR CODE 4 (Retaliation) 17. 5 6 S 1102.5 Plaintiffincorporates by reference the allegations contained in paragraphs 1 through 16 as through fully set forth herein. 18. In violation of Labor Code $$ I102.5(a), (b), and (c), SOX, and WSRCPA, 8 Defendants terminated Williams for disclosing to his supervisors and Defendants' management 9 and federal agents illegal activity by PIMCO management that violated the Securities Exchange l0 Act of lg34,related SEC Rules and Regulations, and California statutes. 19. lt WHEREFORE, Plaintiff seeks judgment against Defendants, and each of them, for: t2 l3 l4 l5 (A) A civil penalty of $10,000.00 for each violation of Labor Code $ 1102.5, or any other provision allowed by law; (B) (C) Costs of suit; and Such other and further relief as the court deems proper. l6 t7 Respectfully submitted, l8 t9 20 Date: March 5,2013 DAVID G. SPIVAK, Attorney for Plaintiff, JASON WILLIAMS 2l 22 23 24 25 26 27 28 Williamsv. PIMCO