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‘The Bond King’ Traces the Arc of a Pioneering Investor

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‘The Bond King’ Traces the Arc of a Pioneering Investor

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For many years, one of many monetary world’s best-known buyers and market commentators could possibly be discovered not on Wall Avenue however in sun-drenched Newport Seaside, Calif. Invoice Gross, who helped discovered and lead the funding agency PIMCO, earned the nickname “The Bond King” for serving to to revolutionize the once-sleepy world of bond investing — and incomes a fortune alongside the best way.

However behind the aw-shucks, folksy demeanor that Mr. Gross, an Ohio native, offered in public was a hard-nosed dealer who fought to squeeze each greenback out of his trades and dominated Pimco with awe and worry. Mr. Gross incessantly clashed together with his personal colleagues, notably Mohamed El-Erian, the urbane economist he helped rent to be PIMCO’s C.E.O. and co-chief of funding. Mr. El-Erian give up in 2014, and Gross was pushed out months afterward, resurfacing at a smaller rival, Janus.

Mr. Gross retired in 2019, unable to repeat the success he discovered at PIMCO. However he remained within the headlines, due to a dispute with a neighbor over his $1 million Dale Chihuly glass sculpture. Through the feud, Mr. Gross blared the theme to “Gilligan’s Island” on repeat, which finally earned him a suspended sentence for harassment final 12 months.

All of that is vividly chronicled in “The Bond King: How One Man Made a Market, Constructed an Empire, and Misplaced It All,” by the NPR “Planet Cash” host Mary Childs, a e-book seven years within the making and out subsequent week. Ms. Childs spent hours speaking with Gross — who self-published a memoir final week (“I’m Nonetheless Standing: Bond King Invoice Gross and the PIMCO Categorical”) — and quite a few present and former PIMCO colleagues. (Mr. El-Erian participated solely by way of prolonged notes from his lawyer.)

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DealBook spoke with Ms. Childs about tracing the arc of the pioneering investor, whose profession helped form an important a part of finance however whose character alienated colleagues and neighbors alike. The dialog has been edited and condensed for readability.

What have been the challenges of writing about Gross?

There have been quite a lot of totally different understandings of Invoice. There was undoubtedly some hero worship. There have been undoubtedly some individuals who seen him as this legend, a deity nearly.

The true problem was, I assumed after I began this e-book that it will finish neatly in 2014 together with his departure from PIMCO and arriving at Janus. However he simply stored doing stuff. And he stored making headlines and making extra information. So I needed to rewrite the ending many instances and simply hold being like, “Oh, OK, a brand new one.”

What’s your response to him placing out his personal e-book?

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[Laughter.] My fact-checker checked info with him. So he had some concept of what was within the e-book. And I think that it didn’t completely stack up in a manner that happy him.

If you first began overlaying Gross and PIMCO, what have been your impressions of them?

I knew how influential they have been. I knew that the best way that my sources talked about PIMCO was indicative that this can be a power to be reckoned with.

One factor I discovered fascinating was simply how hard-nosed PIMCO and Gross have been, how they fought so laborious to get a bit extra cash from a commerce and didn’t care if the folks on the opposite aspect hated them for it.

A lot of Wall Avenue and finance is based on relationships. However PIMCO was like, “No, we don’t owe you something — you owe us.”

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There’s a story from the ’80s the place a really younger bond salesman, who’s a really massive identify in funding administration now, went right down to have lunch with Invoice. The salesperson was like, “Hey, I’d love your online business.” And Invoice mentioned: “Oh, you want my enterprise. You’re going to lose cash on each commerce with me. And that’s going to be good for you, since you want the knowledge of what I’m doing.”

How a lot of an outlier would you say PIMCO was by way of having that kind of angle?

So far as I perceive it, fairly far on the market.

Had been Invoice and PIMCO extra intelligent than the competitors and counterparties?

Folks all the time inform me: “Nicely, he was the beneficiary of a coin flip. Any individual was going to be one of the best performer. He had the wind at his again for 40 years. In fact he did nicely.” I’m like, that’s simply not it. That’s simply not the total story.

How would you in the end sum him up? What sort of individual did you suppose he’s?

I believe he makes essentially the most sense if you happen to view his actions by means of recreation concept. If you consider him as a gambler, he’s all the time contemplating the percentages; he’s determining how a lot he ought to guess at any given second. And he’s a extremely reflective individual: He was a psych main in faculty, and he thinks so much about himself and his actions and his place on this planet. And that makes him doubly attention-grabbing as a result of I believe he is aware of when he ought to cease himself after which he generally simply doesn’t do it.

Among the most gripping materials have been the interactions between Gross and El-Erian. May that partnership ever have labored?

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Mohamed and Invoice simply have such totally different personalities. And each of them, I believe, would say this. Mohamed would possibly say Invoice may be autocratic and form of domineering, and he needs to do what he needs to do and he would possibly make a multitude and that must be cleaned up later. On the flip aspect, Invoice would say about Mohamed, “You’ve simply debated for hours and mentioned nothing.”

One factor I used to be additionally struck by have been the entire cases when Invoice modified his thoughts or appeared to alter his thoughts or ignored issues, and was laborious to work with by being so mercurial. Why do you suppose he acted like this?

Lots of these founder-led corporations rely so closely on the founder, and she or he can form of act nevertheless they need. On this occasion, PIMCO was speculated to be this massive, skilled firm. By the top, Invoice was nonetheless allowed quite a lot of latitude. Founders may be actually tough across the edges. However after a sure level, you must be a giant skilled firm and get polished.

You see it at Bridgewater Associates and different locations the place they’re having a tough time of succession planning. Lots of what makes a founder or entrepreneur profitable is a micromanage-y, perfectionist bent. And that makes studying to take a seat down and step away out of your creation actually laborious.

What kind of stature would you say PIMCO has now? And the way do you suppose Gross is regarded immediately, now that he’s been out of the sport for a few years?

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Gross mentioned in one of many court docket hearings within the neighbor dispute that he’s making an attempt to have a popularity to die with. And that simply form of breaks your coronary heart. He was this massive legend. However folks actually latched on to that neighbor story.

PIMCO has been working very laborious to place themselves as a giant, grown-up agency. A standard place. However each time Invoice’s within the headlines, they’re like, “Oh, my God, it’s this once more.”

Why do you suppose Invoice wasn’t in a position to get anyplace near duplicating PIMCO’s success at Janus?

He was beginning contemporary in a market that already was bumping alongside, not within the route that advantages bonds. However I believe the true reply is that he was making an attempt too laborious. He let emotion get the higher of him, and he wished to show to them that he was nonetheless nice.

What have been you considering when the entire neighbor state of affairs was enjoying out? How do his actions replicate on the person you’ve written about and spoken to folks about for years?

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I believe the bones of it should not totally stunning. He’s very accustomed to strolling proper as much as the sting of the authorized restrict of one thing proper and sitting down there and being like, “I’m right here, when you’ve got an issue let me know.” He was enjoying the music proper on the authorized restrict. It’s not unlawful to play the “Gilligan’s Island” theme track.

Some sources referred to as it the bond “King Lear.”

PIMCO was a giant winner of measures taken to guard the financial system within the aftermath of the monetary disaster. We’re at one other inflection level out there. Why is now a superb time for folks to choose up a e-book about Invoice Gross?

Within the aftermath of the monetary disaster, we made quite a lot of agreements in an emergency, and I believe quite a lot of these weren’t tremendous examined. Or perhaps we couldn’t provide you with a greater various in the mean time. And I do suppose it’s value analyzing these buildings and the way we received there, and that permits us to suppose extra strategically about what to do subsequent.

You’re seeing a seismic change within the financial system and within the Fed’s relationship to markets. Rates of interest have had this extremely lengthy march decrease, and that has clearly benefited the careers of individuals like Invoice Gross. As we reimagine how our markets work, it’s value occupied with what we like right here and what we don’t.

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What do you suppose? Tell us: dealbook@nytimes.com.

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Study details 'transformative' results from L.A. pilot that guaranteed families $1,000 a month

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Study details 'transformative' results from L.A. pilot that guaranteed families ,000 a month

Some of L.A.’s poorest families received cash assistance of $1,000 a month as part of a 12-month pilot project launched nearly three years ago. There were no strings attached and they could use the money however they saw fit.

Now, a new study finds that the city-funded program was overwhelmingly beneficial.

Participants in the program experienced a host of financial benefits, according to an analysis co-authored by University of Pennsylvania and UCLA researchers. Beyond that, the study found, the initiative gave people the time and space to make deeper changes in their lives. That included landing better jobs, leaving unsafe living conditions and escaping abusive relationships.

“If you are trapped in financial scarcity, you are also trapped in time scarcity,” Dr. Amy Castro, co-founder of the University of Pennsylvania’s Center for Guaranteed Income Research, told The Times. “There’s no time for yourself; there’s no time for your kids, your neighbors or anybody else.”

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The Basic Income Guaranteed: Los Angeles Economic Assistance Pilot, or BIG:LEAP, disbursed $38.4 million in city funds to 3,200 residents who were pregnant or had at least one child, lived at or below the federal poverty level and experienced hardship related to COVID-19. Participants were randomly selected from about 50,000 applicants and received the payments for 12 months starting in 2022.

Castro and her colleagues partnered with researchers at UCLA’s Fielding School of Public Health to compare the experiences of participants in L.A.’s randomized control trial — the country’s first large-scale guaranteed-income pilot using public funds — with those of nearly 5,000 people who didn’t receive the unconditional cash.

Researchers found that participants reported a meaningful increase in savings and were more likely to be able to cover a $400 emergency during and after the program. Guaranteed-income recipients also were more likely to secure full-time or part-time employment, or to be looking for work, rather than being unemployed and not looking for work, the study found.

“Instead of taking the very first job that was available, that might not have been a lasting, good fit for the family, [the participants were] saying, ‘Hold on a minute, I have a moment to sit and think and breathe, and think about where I want my family to be,’ ” said Dr. Stacia West, also a co-founder of the University of Pennsylvania’s Center for Guaranteed Income Research.

In a city with sky-high rents, participants reported that the guaranteed income functioned as “a preventative measure against homelessness,” according to the report, helping them offset rental costs and serving as a buffer while they waited for other housing support.

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It also prevented or reduced the incidence of intimate partner violence, the analysis found, by making it possible for people and their children to leave and find other housing. Intimate partner violence is an intractable social challenge, Castro said, so to see improvements with just 12 months of funding is a “pretty extraordinary change.”

People who had struggled to maintain their health because of inflexible or erratic work schedules and lack of child care reported that the guaranteed income provided the safety net they needed to maintain healthier behaviors, the report said. They reported sleeping better, exercising more, resuming necessary medications and seeking mental health therapy for themselves and their children.

Compared with those who didn’t receive cash, guaranteed income recipients were more likely to enroll their kids in sports and clubs during and after the pilot.

Los Angeles resident Ashley Davis appeared at a news conference Tuesday about the study findings and said that her health improved because she could afford to buy fruits, vegetables and smoothies. Before, she was pre-diabetic and “my cholesterol was going through the roof,” Davis said.

“I was neglecting my own needs,” said Davis, who described herself as a single mother of a special-needs child. She switched careers and is now studying to be a nurse, she said.

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Abigail Marquez, general manager of the Community Investment for Families Department, which helped oversee BIG:LEAP, said she’s spent 20 years working on various anti-poverty programs.

“I can say confidently that this is by far the most transformative program,” Marquez said.

BIG:LEAP was one of the largest of more than 150 guaranteed-income pilot programs launched nationwide in recent years. The program was funded through the city budget and included $11 million that city leaders moved from the Police Department budget in response to nationwide protests after the murder of George Floyd by a Minneapolis police officer in 2020.

Despite the positive research findings, programs like BIG:LEAP have raised concerns among some taxpayer groups.

“It’s simply wrong for the city government to take tax dollars earned and paid by people who are trying to pay their own bills and transfer that money to other people chosen by the government to receive it,” the Howard Jarvis Taxpayers Assn. said in a statement. “Guaranteed-income programs are appropriately funded voluntarily by charitable organizations and foundations, not forcibly through the tax code.”

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Councilmember Curren Price, whose South Los Angeles district includes some of the city’s most impoverished neighborhoods, introduced a motion Tuesday to continue a version of the pilot with a focus on people in abusive relationships and young adults in need of mental health and emotional support.

Price said he would contribute $1 million toward the next phase from his council funds. Councilmember Hugo Soto-Martinez also pledged $1 million.

Beyond that, it’s not clear where the next round of funding would come from. Price expressed hope the city would continue to support the effort through the general budget.

“I don’t know how realistic it is that it’s going to be $40 million again,” Price said. “But I think it’s realistic that we could receive something.”

This article is part of The Times’ equity reporting initiative, funded by the James Irvine Foundation, exploring the challenges facing low-income workers and the efforts being made to address California’s economic divide.

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Read the Letter to Sullivan & Cromwell

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Read the Letter to Sullivan & Cromwell

300 New Jersey Avenue, N.W., Suite 900
Washington, D.C. 20001
Phone: 202-465-8728
July 30, 2024
Joseph C. Shenker Esq.
Sullivan & Cromwell LLP
125 Broad Street
New York, NY 10004
Re: Blacklisting detractors of the Israeli government provoked by the indiscriminate Israeli
killings of infants, children, women, and men in Gaza, including a siege openly earmarked by no
water, no food, no shelter, no power, no medicine, no journalists.
Dear Mr. Shenker:
This letter responds to your remarks reported in The New York Times, “A Wall Street Law Firm
Wants to Define Consequences of Israel Protests,” by Emily Flitter (July 9, 2024).
Speaking as a leader of Sullivan & Cromwell, you stated all applicants for employment would be
vetted for lawful statements, actions, or beliefs that your law firm defines as antisemitic,
including mingling with pro-Palestinian demonstrators chanting “From the river to the sea,
Palestine will be free.” Will Sullivan & Cromwell establish an Index of Forbidden words, songs,
signs, or sayings that would be off limits to any of the firm’s employees?
We are concerned about the absence of due process safeguards that could destroy an applicant’s
professional career in addition to Sullivan & Cromwell’s apparent complacency with hiring
lawyers who engage in hate speech or violence against Arabs or other races. Doesn’t that
discrepancy smack of George Orwell’s Animal Farm, “All animals are equal, but some or more
equal than others?” Is Sullivan & Cromwell, now in its 145th year, seeking to make amends from
its earlier history of notorious discrimination against Jews until the 1950s, not to mention biases
against Muslims and Arabs?
There is no articulable definition of verbal antisemitism free from manipulation for ulterior
purposes. Sullivan & Cromwell seems to equate anti-Zionism with antisemitism. But renowned
scholars of Judaism like Allan C. Brownfeld insist that Zionism is a form of political idolatry that
elevates worship of the State above worship of the Torah and God. Would Sullivan & Cromwell
hire Mr. Brownfeld?
Will Sullivan & Cromwell provide applicants a fair warning of what words or acts will be treated
as antisemitic? What will be Sullivan & Cromwell’s standard of proof? Reasonable suspicion,
probable cause, a preponderance, clear and convincing, beyond a reasonable doubt, or non-
fantastic speculation? What rules of evidence will govern the antisemitism vetting? Will hearsay
be admitted? How will documents be authenticated? Will applicants have a right to counsel to
voice objections and a right to confront their accusers? Who will do the vetting? What selection

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Fred Segal closes its remaining stores, ending a Los Angeles fashion era

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Fred Segal closes its remaining stores, ending a Los Angeles fashion era

Fred Segal, once a centerpiece to the Los Angeles fashion scene, closed its two remaining stores Tuesday, bringing a quiet end — at least for now — to a name that endured for decades as a shopping destination.

The brand, which once had nine stores in California and locations in Switzerland and Taipei, succumbed to a challenging retail landscape, never recovering from the impact the COVID-19 pandemic had on sales despite being a fixture of Los Angeles fashion since the 1960s, said owner Jeff Lotman.

When Lotman bought the company in 2019, he said he had no plans to run the day-to-day operations of the stores, but was forced into the role by the pandemic.

“Everything just fell apart and then I sort of had to become a retailer, which is not what I planned to do,” he said. “I knew nothing about retail.”

Instead, Lotman, who owns the brand licensing company Global Icons, had aspired to oversee a dramatic expansion of the Fred Segal brand that was supposed to include around 20 new shops in major cities across the country and a move into home decor and accessories.

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“It’s not that retail is dying,” Lotman said at the time. “Boring retail is dying.”

The marquee name first appeared in 1961, when Fred Segal opened a small shop in West Hollywood, which grew into a cultural touchstone interwoven into the identity of Los Angeles. Its high-end, California-inspired line of clothes included bikinis, denim shorts and tank tops, often blending luxury with a laid-back look.

The company made its way into popular culture, getting referenced in shows like “Beverly Hills, 90210” and “Dawson’s Creek” and attracting celebrity customers such as Jennifer Aniston and Diana Ross.

Before the pandemic, Lotman said, the company had pending deals to open stores in Dubai, Canada and Japan. The two stores closing Tuesday are in West Hollywood and Malibu.

“Sixty years the company’s been around and it’s a shame that it’s finally coming to a close,” Lotman said.

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One of the company’s downfalls was not having enough self-branded products, Lotman said. Fred Segal stores carried close to 200 outside brands but had few of their own offerings.

“That’s really what we needed to develop to make this thing work,” Lotman said. “Retail is hard and being a multi-brand retailer is even harder.”

While the majority of the Fred Segal empire is shut down, including its online store, a Fred Segal Home furnishings store will remain open in Culver City.

The Segal family owns the Fred Segal trademark, said Lotman, who was licensing the trademark. Any decision about whether to open new stores or begin selling online again would be up to them, he said.

Larry Russ, the family’s attorney, said this is not the end of the road for the brand, but could not share more information.

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“We are going to be looking for a new operator to open up more stores in the future,” he said.

Lotman said he isn’t aware of any concrete plans to reopen business, but he’s optimistic.

“Hopefully someone may pick it back up and get it to go,” he said. “It is truly one of the great fashion brands out there.”

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