David Chandler is tired of waiting for Pacific Investment Management Co. to decide whether to help investors trapped by the collapse of the $330 billion auction- rate securities market.

The retired commodities trader and lawyer from San Diego bought ``several hundreds of thousands of dollars'' in auction- rate preferred shares issued by the company's closed-end funds before trading seized up in February. Pimco is the only one of the five largest managers of publicly traded closed-end funds that hasn't initiated a buyback to let investors cash out.
``They are a major institution and they are not standing behind the clients,'' Chandler, 68, said in a telephone interview from his home in San Diego. He has sued UBS AG, the broker that sold him the Pimco securities.
Pimco is caught between the sometimes competing interests of preferred holders like Chandler and investors who own the funds' common shares, which trade on exchanges like stocks.
A major obstacle for fund managers is how to refinance auction- rate securities without increasing costs, which would penalize the common holders. While rivals say they have found a solution, Newport Beach, California-based Pimco is working on it.
``Pimco knows and understands that this is a difficult issue for some preferred shareholders,'' a company spokesperson said in an e-mailed statement to Bloomberg. ``We are devoting considerable time, energy and attention to finding an approach that, consistent with our fiduciary obligation, reconciles the competing considerations facing common and preferred shareholders.''
The firm, whose investments are overseen by Bill Gross and Mohamed El-Erian, has more than $800 billion under management. Pimco's closed-end funds sold $4.3 billion of preferred shares, ranking the company fourth among U.S. managers, after Nuveen Investments Inc., BlackRock Inc. and Eaton Vance Corp. and ahead of Cohen & Steers Inc.
``The funds' boards have to carefully weigh the benefit of redeeming the preferred shares, which gives a reputational benefit, against the duty they have to the common shareholders,'' said Cecilia Gondor, a Miami-based analyst at Thomas J. Herzfeld Advisors Inc., who tracks the fund industry.
Gross, 64, has been chief investment officer since Pimco's founding in 1971, and he runs the $128 billion Total Return Bond Fund, the world's largest fixed-income mutual fund. His average annual return of 6.91 percent in the past 10 years through April 30 ranks first among intermediate bond funds, according to data compiled by Morningstar Inc. in Chicago.
El-Erian, 49, joined Pimco in 1999 and earned a reputation as one of the most skilled emerging-markets investors, posting a 19 percent annualized return through October 2005 with his Emerging Markets Bond Fund. He left in 2006 to head Harvard University's endowment before abruptly quitting and returning to Pimco in 2008. He serves as co-chief investment officer with Gross. Refinancing Risk
Pimco preferred shareholders such as Chandler have been frustrated by the company's relative lack of communication. Munich-based insurer Allianz SE, Pimco's parent, held a conference call for investors March 11. A second call, scheduled for April 3, was canceled.
(Source: Bloomberg)