Broadway invalidates activist investor's proxy challenge

Broadway Financial in Los Angeles has determined that an activist investor is ineligible to mount a proxy challenge this year.

Commerce Home Mortgage in Irvine, Calif., which is led by former bank CEO Steven Sugarman, has been pressing the $506 million-asset Broadway to sell itself. The mortgage firm also disclosed in a June 9 filing that it had nominated former Los Angeles Mayor Antonio Villaraigosa to challenge for one of Broadway’s board seats.

Villaraigosa is chairman of Capital Corps, which is Commerce's parent company. Sugarman once was CEO of Banc of California in Irvine.

Broadway said in its own filing Monday that the nomination is invalid after its transfer agent determined that Commerce was not a shareholder by the May 1 record date for the meeting. The company said it will not count any shareholder votes for Villaraigosa.

The meeting is set for June 24.

Commerce, in a February regulatory filing, said it had beneficial ownership of nearly 9.7% of Broadway’s stock. The company bought shares in Broadway from the Treasury Department as part of the unwinding of the Troubled Asset Relief Program.

Commerce, in its recent filing, urged shareholders to withhold votes from Broadway directors Virgil Roberts and Daniel Medina. The company also wants investors to reject Broadway's proposal on executive compensation.