Banc of California in Irvine announced that an independent investigation has determined that the company did not violate the law regarding alleged inappropriate relationships with third parties.
A final report from WilmerHale, a law firm with no previous ties to Banc of California, also concluded that Jason Galanis, a Los Angeles financier who was charged last year with defrauding investors, had no indirect or direct control or undue influence over the $11.2 billion-asset company. The investigation did not find any loans or related-party transactions that had impaired the independence of any director.
"We are pleased to have this investigation behind us,” Robert Sznewajs, Banc of California’s chairman, said in a press release Thursday.
The investigation was launched in late October after KPMG, the company’s independent auditor, sent a letter to Sznewajs raising concerns about allegations of "inappropriate relationships with third parties" and "potential undisclosed related-party relationships."
WilmerHale had already concluded that a press release in mid-October contained “inaccurate information, notably that an earlier investigation had been authorized by management rather than the board. That release also characterized the initial investigation as independent even though the law firm involved in that probe had previously represented the company and its chairman and CEO, Steven Sugarman.
The final results of WilmerHale’s investigation came a day after Banc of California announced a number of corporate governance reforms. The company also appointed Richard Lashley, an activist investor, to take over a board seat that Sugarman relinquished last month.
Banc of California is facing pressure from Legion Partners Asset Management, an investor based in Beverly Hills, Calif. The firm, which owns about 6.6% of the company’s stock, disclosed in a recent regulatory filing that it will nominate Roger Ballou, a former chairman and Fox Chase Bancorp, and Marjorie Bowen, a retired investment banker, for director posts.
Legion, which has expressed "serious concerns" about Banc of California’s corporate governance, has pushed in recent weeks for the board to hire an independent financial adviser and to form a special committee "to consider all strategic alternatives … including a possible sale."