Pilgrim Baxter & Associates didn't have to air any of its dirty laundry last week in Massachusetts Superior Court.
Pilgrim Baxter executives and portfolio manager James D. McCall were spared court appearances in Boston after attorneys settled out of court over a non-compete agreement McCall signed with the Wayne, Pa.-based money manager in 1997.
McCall, who managed several of the PBGH Funds, wanted to leave Pilgrim Baxter in 1998 to join Merrill Lynch of New York. He filed a suit against Pilgrim Baxter and its parent, United Asset Management of Boston, saying the non-compete contract was not binding.
Pilgrim Baxter filed a counter suit asking a Massachusetts judge to enforce the agreement. Lawyers from both sides would not comment on the settlement.
If McCall and Pilgrim Baxter executives had taken the stand, the case was expected to offer a rare glimpse into the current state of affairs at Pilgrim Baxter. In his suit, McCall said he was promised money he never received and alleged nepotism, claiming that CEO Harold Baxter's daughter, also a portfolio manager at the firm, was given more money despite poor performance.
McCall also claimed that Pilgrim Baxter and UAM were trying to force him to stay in an attempt to boost the asking price for the firm, which was on the selling block. Nationwide Financial Services of Columbus, Ohio, was in negotiations to buy the firm last year, but the deal fell through in October.
Pilgrim Baxter denied the charges in court papers, saying that it spent a lot of its money and promotional efforts on McCall.