Bloggers Comment on UCP’s Suspicious 8-K

As originally appeared in the Troubled Company Reporter.

PICO Holdings, Inc. (Nasdaq:PICO), based in La Jolla, Calif., is a diversified holding company reporting recurring losses since 2008. PICO owns 57% of UCP, Inc. (NYSE:UCP), 100% of Vidler Water Company, Inc., a securities portfolio and various interests in small businesses. PICO has $662 million in assets and $426 million in shareholder equity. Central Square Management LLC and River Road Asset Management LLC collectively own more than 11% of PICO. Other activists at http://ReformPICONow.com/ (RPN) have taken to the Internet to advance the shareholder cause.

The bloggers note that on March 3, 2017, UCP issued “a highly suspicious 8-K.” According to this document, the UCP Board of Directors adopted an amended and restated Code of Business Conduct and Ethics so that it “clarifies the Company’s policy relating to the receipt of gifts and entertainment that could influence, or be perceived to influence, business decisions on behalf of the Company.”

Previously, UCP employees could accept no gifts that could influence or be perceived to influence business decisions. Now, under the Amended Code, they can receive gift certificates or gift cards up to $100 per calendar year.

The bloggers comment: “This seemed suspicious to us, so we called our Crack Strategist. We said, ‘Check this out. Sounds like there is a gift on the table that someone at UCP really wants.’ Our Crack Strategist responded sarcastically, ‘RPN, you haven’t learned much in the last year. It’s more like someone at UCP has already received the improper gift. And now the Code is being amended to make what was a violation now permissible.’

“We stand corrected.”

The bloggers want Michael Cortney, Chairman of UCP, to “explain why the Board has made this suspicious change to the Code of Business Conduct and Ethics. The UCP Board should explain to shareowners why small amounts of potential graft are preferable to zero potential graft.”

The bloggers continue, “The last sentence of the main paragraph really caught our eye: ‘In addition, the Company included a record retention policy, which outlines the reasons for a retention policy, the types of documents covered and compliance.’

“Our Crack Strategist commented: ‘That sounds serious. That is highly unusual. There aren’t too many reasons why a Board articulates a document retention policy. And I can’t think of any that would be good.’

“We call on Mr. Cortney to explain why the Board promulgated a Record Retention Policy.”

The bloggers state that a “suspicious pattern is developing.”