February 25, 2014.

Inside the Showdown Atop Pimco, the World's Biggest Bond Firm

Throughout recorded time, and probably since the end of the Neolithic Age, there have been three kinds of people in the world, the High, the Middle, and the Low. They have been subdivided in many ways, they have borne countless different names, and their relative numbers, as well as their attitude towards one another, have varied from age to age: but the essential structure of society has never altered. Even after enormous upheavals and seemingly irrevocable changes, the same pattern has always reasserted itself, just as a gyroscope will always return to equilibrium, however far it is pushed one way or the other.

NEWPORT BEACH, Calif.----Tension increased at Pacific Investment Management Co.'s headquarters here last summer. The bond market was under pressure, losses grew and clients pulled billions of dollars from the firm.

The aims of these groups are entirely irreconcilable.....

Bill Gross, who co-founded Pimco in 1971 and is largely responsible for building it into a behemoth overseeing almost $2 trillion in assets, struck some of his colleagues as testier than usual. He argued openly with Mohamed El-Erian, Pimco's chief executive—something employees say they rarely had seen.

Winston stopped reading, chiefly in order to appreciate the fact that he was reading, in comfort and safety. He was alone: no telescreen, no ear at the keyhole, no nervous impulse to glance over his shoulder or cover the page with his hand. The sweet summer air played against his cheek. From somewhere far away there floated the faint shouts of children: in the room itself there was no sound except the insect voice of the clock. He settled deeper into the arm-chair and put his feet up on the fender. It was bliss, it was eternity. Suddenly, as one sometimes does with a book of which one knows that one will ultimately read and re-read every word, he opened it at a different place and found himself at Chapter III. He went on reading:

Mr. Gross----by his own admission, a demanding boss----had long showed respect for Mr. El-Erian and indicated that the younger man eventually would take over the world's biggest bond firm. But one day last June, the two men squared off in front of more than a dozen colleagues amid disagreements about Mr. Gross's conduct, according to two people who were there.