Gary Black has resigned as chief executive of the Janus Capital Group (JNS) following a turbulent three-year term at the helm of the once-highflying mutual fund company.

Janus rode the technology wave of the late 1990s to great success, but stumbled badly when that bubble burst. A fund-trading scandal in 2003 added to the company’s woes.

Black was hired in early 2006 to clean up the mess. In an effort to scale back the influence of individual fund managers, Black put in place a team management system and tried to tie managers’ pay to the long-term performance of their funds.

Naturally, there was a backlash. About a dozen fund managers and senior executives left after Black was brought on board, and at least one fought back in court. Former fund manager Edward Keely successfully sued Janus for $4.8 million in May for a contract violation. He was awarded $2.7 million in legal costs.

Jeffrey Hopson, an analyst with Stifel Nicolaus & Co. in St. Louis, told Bloomberg that Black was “a lightning rod within the organization,” and that the move “had to be done.” 

Steve Scheid, chairman of Janus’ board of directors, said in a statement: “After much consideration, Gary and the board have come to the mutual decision that the time is right to bring new leadership to Janus. During Gary’s tenure Janus made significant progress on its goals, including strengthening the firm’s investment performance and risk-management, revitalizing the Janus brand, generating positive net flows, and building out the firm’s product and global distribution platforms. We thank him for his dedication in helping build Janus into a world-class investment organization and wish him well in his future endeavors.”

Black, 49, said in the same statement, “The firm is in a much stronger place than when I joined, and the time is right for a change.”

Janus said it will take a $12.1 million charge related to the personnel shift.

Black’s interim replacement is Tim Armour, a member of the Janus board. According to the statement from Janus, Armour, 60, was a senior executive for 10 years with Morningstar, the Chicago-based research firm, and served as president of Stein Roe Farnham’s mutual-fund division for five years. He joined Janus’s board in March 2008 and served on its strategic planning committee.

Armour will assume day-to-day management and help the board recruit a permanent successor, the company said.