Activist investor mounts proxy battle at Banc of California
An activist investor that wants Banc of California to consider selling itself plans to compete for two board seats at the Irvine company’s annual meeting.
Legion Partners Asset Management in Beverly Hills, Calif., disclosed in a regulatory filing Tuesday that it will nominate Roger Ballou and Marjorie Bowen for director positions. The investor, which owns about 6.6% of the $11.2 billion-asset company’s stock, also plans to submit a proposal that would allow a simple majority vote to amend corporate bylaws.
Banc of California currently requires an 80% vote of outstanding shares to change its bylaws.
Legion said it has "serious concerns" about Banc of California’s corporate governance, including the possibility of related-party transactions. The investor has pushed in recent weeks for the board to hire an independent financial adviser and form a special committee "to consider all strategic alternatives … including a possible sale."
Ballou was chairman of Fox Chase Bancorp when the company was acquired in July by Univest Corp. of Pennsylvania; he is now on Univest's board. Bowen is a former investment banker with Houlihan Lokey.
The move by Legion came just weeks after Banc of California announced that Steven Sugarman had resigned as chairman and CEO and that it had permanently split those roles. A banking veteran was appointed chairman, and the board said it plans to form a search committee to find a new CEO.
Many of Banc of California's issues stem from claims made by an anonymous blogger in October that Sugarman had ties to Jason Galanas, a Los Angeles financier who was charged last year with defrauding investors. The company has also been hit with claims of questionable related-party transactions.
Banc of California said in an Oct. 18 press release that it had launched an independent investigation and found the blogger’s claims to be groundless.
The company later disclosed that the release had “inaccurate” information, notably that management — and not the board — had authorized the probe. The release also characterized the investigation as independent when the initial law firm involved had previously represented Sugarman and the company.
The company said last month that a separate investigation initiated by its board — and handled by a different law firm — had so far found no evidence that Galanas had "any direct or indirect control or undue influence over the company." That investigation also found no indication that "any loan, related-party transaction or any other circumstance has impaired the independence of any director."