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Common Man Is Mad As Hell & Not Going To Take It Anymore

from McAlvany Financial:

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1 comment to Common Man Is Mad As Hell & Not Going To Take It Anymore

  • rich

    Common man does not have a Family money tree?

    CEO Helps Brother, Again, With $100 Million Soccer Stadium Deal

    The bank has drawn big investors including Oaktree Capital Management and counts former Los Angeles Mayor Antonio Villaraigosa as an adviser.
    And the market-beating returns have come despite misgivings expressed over the years by one of the bank’s biggest shareholders, academics and community activists over deals benefiting Sugarman’s family and board members. Institutional Shareholder Services, an adviser to investors, credits the bank’s auditing but gives the firm’s overall governance risk the worst grade on the scale. (Tip No. 7: “Listen to the skeptics.”)

    Sugarman, in an interview, said the Irvine-based bank will keep pursuing opportunities that optimize returns even if that means more related-party transactions. The bank details them in regulatory filings, noting they’ve been vetted by the board. To a degree, such deals are inevitable, he said, because the board and executive team are almost never more than “one to two degrees of separation” from leaders in Southern California’s business community.

    Any time potential conflicts arise, the bank will “manage them, we’ll make sure they’re done right and we’ll make sure there’s full disclosure.”

    A company spokesman, Cale Ottens, said Sugarman’s brother Jason — one of more than two dozen investors in the Los Angeles Football Club — had no involvement in the stadium deal. Jason Sugarman didn’t respond to messages seeking comment. Nor did Jason Sugarman’s father-in-law, Hollywood executive Peter Guber, a fellow owner who serves as the club’s executive chairman and co-owns the Golden State Warriors basketball team.
    Warning Signs

    The soccer club and its partners aim to privately finance the $350 million stadium, according to the team’s website. Banc of California’s $100 million contribution, described by people with knowledge of the deal, exceeds the lender’s combined profits for 2014 and 2015. The company has promised to pay it over 15 years, the people said.

    Such transactions, even when disclosed, should serve as warning signs for investors when deciding whether to buy the stock, said William Black, a former regulator who’s now an economics and law professor at the University of Missouri-Kansas City.

    “These kinds of conflicts of interest, we have known for millennia, are associated with a dramatically increased risk of failure, and an amazingly increased risk of loss upon failure,” said Black, who worked at the Office of Thrift Supervision in the 1990s.
    Securities Book

    Within a year, Banc of California adopted its new name as its balance sheet swelled. The firm completed acquisitions, expanded its securities book, added branches and increased lending. Along the way, it drew accolades for expanding in California communities neglected by other banks.
    But even the California Reinvestment Coalition, which has praised such work, expressed concerns in 2014 about the bank’s related-party deals.

    The relationship with Oaktree, the private equity shop run by Howard Marks, required Banc of California to make additional disclosures to shareholders. After the investment firm took a stake in November 2014, Banc of California extended more than $50 million in credit facilities to companies owned by Oaktree. In 2014 and 2015, Oaktree also paid the Palisades Group about $10.5 million in management fees. The firm exited its stake in the bank during this year’s second quarter, according to a regulatory filing. An Oaktree spokeswoman declined to comment.

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