The sudden departure of Steven Sugarman as chairman and chief executive of Irvine’s Banc of California Inc. might create a vacancy in some prime Santa Monica real estate.
Sugarman, who resigned last week, worked out of space sublet by the bank in a 16th-floor office at 100 Wilshire, a 21-story building overlooking the Pacific Ocean that is also home to California Bank & Trust, Merrill Lynch & Co., Douglas Emmett Management, Eastdil Secured, Worthe Real Estate Group, and a host of law firms.
The future of the space, which has sweeping ocean views, is unclear. Neither representatives of Cushman & Wakefield, the building’s leasing agent, nor Barrister Executive Suites, its main sublet company, responded to requests for comment.
According to CoStar, 100 Wilshire, owned by Douglas Emmett Inc., is fully leased, with monthly asking rents of $7.50 a square foot – likely among the highest rates in Los Angeles. The average monthly rent in Santa Monica is $5.76 a square foot.
Sugarman helped build Banc of California into Orange County’s largest bank by assets, with about $11.2 billion. It employs 945 in Orange County and 1,728 companywide.
Yet his resignation comes amid an investigation of possible dealings between the bank and Jason Galanis, who pleaded guilty to securities fraud involving a separate company last year.
The bank’s board hired WilmerHale, an international law firm with an office in downtown Los Angeles, to look into the issue late last year. An investigation by the firm has so far found no evidence of any relationship between Galanis and the bank.
The bank said it expects to receive a final report in coming weeks.
The investigation did reveal, however, that the bank issued an incorrect news release on Oct. 18 stating the board had investigated the issue.
“Company management rather than any subset of independent directors” started the investigation, the bank said. “The press release also incorrectly stated that the board or a group of ‘disinterested directors’ had received ‘regular reports including related to regulatory and governmental communications. This overstated both the degree to which the company had been in contact with regulatory agencies about the subject matter referenced in the blog post, as well as the involvement of the directors in oversight or direction of the inquiry.”
The Securities and Exchange Commission launched an investigation into the incorrect news release on Jan. 12.
The bank said it intends to fully cooperate with the SEC’s investigation by providing access to bank documents related to the Oct. 18 news release and related public statements.
Meantime, a triumvirate of officials will take over day-to-day operations while the search for a successor is undertaken.
Robert D. Sznewajs, chairman of the bank’s joint audit committee, was tapped to take over as chairman; Hugh Boyle, chief risk officer, will become interim chief executive; and J. Francisco Turner, chief strategy officer and principal financial officer, will become interim chief financial officer and president.
“The board has trust and confidence in Hugh and Fran as they are both capable and experienced executives who have played key roles in building the company to where it stands today,” Sznewajs said in a statement.
A statement from Sugarman said he is “proud to have led Banc of California and helped to build it into California’s Bank.”
Calls to Sugarman’s Santa Monica office were not returned.
Michael de los Reyes is a staff reporter at the Orange County Business Journal. Staff reporter Daina Beth Solomon contributed to this report.
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