Investor group Legion Partners LLC called for the appointment of new independent directors to Banc of California Inc.'s board, as well as for the company to review all strategic alternatives, including a possible sale.
In a Jan. 24 Schedule 13D filing, the group stated that it considers the company's changes to its corporate governance policies — which include the recent resignation of former Chairman and CEO Steven Sugarman — as insufficient. Months earlier, an anonymous blogger alleged, among other things, that Sugarman was associated with Jason Galanis, who has been charged with market manipulation and several counts of fraud. The SEC has initiated an investigation into some of the allegations, while a separate investigation commissioned by the company and conducted by law firm WilmerHale found no evidence that the company had ties to Galanis.
In the filing, the investor group — which includes California State Teachers' Retirement System — said it had "lost confidence" in the board and independent directors, whom it said allowed questionable transactions to go "largely unchecked." The group also believes the Banc of California board should hire a nationally recognized independent financial adviser and form a special committee of independent directors to evaluate the company's strategic alternatives.
The filing also mentioned that, in December, the California State Teachers' Retirement System put forward a shareholder proposal calling for an amendment to the company's bylaws that would allow the bylaws to be amended by a simple majority vote of the shareholders, or if necessary, by standard closest to simple majority voting. The proposal sought to allow shareholders to better address governance concerns in the company.
Bradley Vizi, Christopher Kiper and Raymond White are managing directors of Legion Partners, which has aggregate beneficial ownership of 3,129,179 shares of Banc of California, or a 6.3% stake, based on the company's 49,733,243 outstanding common shares as of Oct. 19, 2016.
The company did not immediately respond to a request for comment on the matter.