What happened

Shares of Banc of California (NYSE:BANC) are trading down by about 10% as of 2:30 p.m. EST today after the company announced the resignation of its CEO, Steven Sugarman, and provided details into an internal investigation of company management.

Banc Of California Logo

Image source: Banc of California.

So what

In October 2016, a short report linked Sugarman to John and Jason Galanis, a father-son duo with a long history of involvement in securities and banking frauds. At the time, Banc of California largely denied the relationship between management and the serial fraudsters, putting out a press release that detailed internal investigations of the matter.

Today, though, Banc of California admitted that its October 18, 2016 press release contained a number of misstatements and falsehoods about its investigation of its then-CEO, Steven Sugarman.

What It Said in October 2016

What It's Saying Now

Disinterested directors of the board of directors directed the investigation.

The investigation was actually initiated by company management.

The investigation was "independent."

The law firm hired for the investigation had a previously established relationship with the company and its CEO.

Members of its board had received "regular reports including related to regulatory and governmental communications" about the matter.

The disclosure overstated the degree of contact between the bank and regulators, and well as the involvement of the company's board of directors in oversight.

Data source: Press release.

Skeptical investors are right to wonder what else the company may have misrepresented, given its willingness to make what appear to be false and misleading statements about an internal investigation of company management.

Now what

The Banc of California indicated that it was cooperating with January 12, 2017, formal order by the Securities and Exchange Commission to deliver certain documents to regulators. Steven Sugarman stepped down as CEO and chairman of the board.

The company announced that Sugarman was replaced as chairman of the board by the company's current chair of its audit committee, Robert D. Sznewajs, and that it is currently looking for someone to fill the vacancy of CEO.

Jordan Wathen has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.