By Jennifer Ablan and Jonathan Stempel
NEW YORK (Reuters) -- Billionaire bond investor Bill Gross sued his former employer Pacific InvestmentManagement Co and its parent Allianz SE for $200 million, saying a greedy "cabal" of executives drove him out of the bond fund giant he helped found because they wanted his huge bonus for themselves.
The lawsuit ratchets up the vitriol between Gross, 71, who now works at Janus Capital Group Inc, and Pimco, which he built over four decades into a $2 trillion bond fund company. His ouster was announced on Sept. 26, 2014.
In plotting to get rid of him, Pimco managing directors were "driven by a lust for power, greed, and a desire to improve their own financial position and reputation," Gross said in a complaint filed on Thursday in the California Superior Court in Orange County.
Gross had been "on track" to receive a bonus topping $250 million in 2014, with most paid late in the year, according to the complaint. He accused Pimco of constructive termination, breach of contract, and bad faith.
"This lawsuit has no merit and our legal team will be responding in court in due course," Pimco spokesman Michael Reid said. Allianz also said the lawsuit has no merit.
A Janus spokeswoman called the lawsuit "a personal matter related to Bill."
Gross, through a spokesman, declined to comment. His lead lawyer Patricia Glaser said in a statement any recoveries will go to charity, including the Pimco Foundation.
"I was saddened to hear Bill felt it necessary to revisit this already well-aired dirty laundry," said John Brynjolfsson, a former Pimco managing director and colleague of Gross. "I suspect all his confidants told him to move on."
Known on Wall Street as the "Bond King," Gross exited Pimco eight months after second-in-command Mohamed El-Erian quit due to Gross's overbearing management style.
That style generated much negative press in 2014, as did investor outflows and weak performance by the flagship Pimco Total Return fund, which Gross had built into the world's largest bond fund by assets.
Total Return's assets peaked at $293 billion in April 2013, but have since fallen below $100 billion. It has been surpassed in size by the Vanguard Total Bond Market Index fund. Pimco's assets under management totaled $1.52 trillion as of June 30.
Gross now oversees just $1.4 billion at the Janus Global Unconstrained Bond fund.
In the complaint, Gross said a difference in strategy prompted his falling out with El-Erian.
He said El-Erian wanted to give investors an "extensive and varied menu" like at a Cheesecake Factory restaurant, of investment choices including stocks, commodities, real estate and hedge fund-like products, while Gross favored a "bonds and burgers" focus on markets that fueled Pimco's success.
Gross said that after El-Erian left, other Pimco executives plotted to drive him out, and share in his 20 percent stake in Pimco's bonus pool, because they thought he was impeding their careers.
He said this plan was "hatched" by Daniel Ivascyn, who succeeded him as Pimco's group chief investment officer and allegedly helped recruit others to the cause.
Pimco's bonus pool totaled $1.3 billion in 2013, and Gross' pay that year topped $300 million, the complaint said.
By mid-September 2014, when conditions had become untenable, Gross said he began negotiating to resign as chief investment officer, cut his bonus, give up oversight of Total Return, and as "further humiliation" be barred from Pimco's offices in Newport Beach, California.
Gross said he worked out an arrangement with Allianz Chief Executive Michael Diekmann, but Pimco officials including current CEO Douglas Hodge "somehow" overruled their boss and came up with a lesser role that effectively meant his firing.
He also said Hodge's take-it-or-leave-it solution was designed to conceal Gross' much-diminished role from investors, the press and the markets.
Gross "could not agree to participate in this deceit," the complaint said.
The lawsuit "tends to drag out both sides' dirty laundry in the open so I think it will hurt both Bill and Pimco," said Scot Shier, a financial adviser at Quintessential Financial Corp in Mission Viejo, California who invests client money in Pimco funds.
Forbes magazine estimates Gross' net worth at $2.3 billion.
Through Wednesday, his Janus fund had returned negative 1.61 percent this year, lagging nearly three-quarters of its peers and trailing the Barclays U.S. Aggregate Bond Index by 2.94 percentage points, according to Morningstar Inc.
The case is Gross v. Pacific Investment Management Co et al, California Superior Court, Orange County, No. 2015-00813636.
(Reporting by Jennifer Ablan and Jonathan Stempel in New York; Additional reporting by Trevor Hunnicutt; Editing by Bernadette Baum, Richard Chang and David Gregorio)