Thomas J. Barrack Jr., the chairman of President Trump’s inaugural committee, is under pressure from an activist investor to resign as chief executive of Colony Capital, a real estate investment firm he founded.
Blackwells Capital sent a searing letter to Colony on Tuesday, demanding that Mr. Barrack be replaced after Colony’s stock price plunged over the last three years. The investment firm also cited two federal investigations of the inaugural committee, calling them a distraction for Mr. Barrack.
“Colony’s board has given Tom Barrack too much deference and too much latitude for too long,” Blackwells’ founder, Jason Aintabi, said in the letter. “His continued, imperial reign over the company damages its credibility and business prospects, and creates a tremendous overhang on the stock.”
Blackwells listed several reasons for Mr. Barrack’s ouster, including an ill-fated three-way merger in 2017 with NorthStar Asset Management and NorthStar Realty Finance that Mr. Barrack orchestrated.
“Since then, Colony’s share price has fallen 66 percent, destroying more than $6 billion of shareholder wealth,” Blackwells said.
Blackwells owns just 1.85 percent of Colony, but has successfully mounted activist campaigns before, notably against Supervalu, a supermarket chain based in Minnesota. Activist investors often buy small stakes in companies and then try to rally the support of other shareholders to their cause.
As part of the shake-up, Blackwells is also seeking to nominate five new members to Colony’s board and is pressing the company to sell assets and repurchase shares.
In a statement on Tuesday, Colony noted that Blackwells was involved in naming three directors this year. It also pointed to a number of steps that Colony had taken to cut costs, simplify its business and shift its focus to “digital infrastructure,” which includes data centers and cellphone towers.
It also said it would review the Blackwells board nominees.
Mr. Barrack had announced succession plans at Colony: Marc Ganzi, a co-founder of Digital Bridge, which Colony acquired in June, will replace Mr. Barrack in 2021. But Blackwells, noting that Mr. Ganzi is a friend of Mr. Barrack’s, said the timeline was not quick enough.
The inaugural committee that was led by Mr. Barrack, a billionaire and a friend of Mr. Trump’s, is facing federal investigations in New York and Washington, as well as one by New Jersey’s attorney general, into how the fund spent the record $107 million it raised for Mr. Trump’s swearing-in celebrations.
He has also come under the scrutiny of federal investigators looking into possible foreign influence into Mr. Trump’s 2016 campaign.
“Mr. Barrack is undoubtedly distracted by at least two congressional investigations and at least one reported criminal investigation into his political and personal activities, including as chairman of the inaugural committee for President Trump and as a man who sought a special role within the Trump administration,” the Blackwells letter stated.
The federal inquiries have gone on for more than a year, but Mr. Barrack has not been charged with any wrongdoing.
Colony was in talks in 2017 to buy some or all of the assets of the Weinstein Company, which was struggling to contain the fallout from allegations of sexual harassment against Harvey Weinstein, the studio’s co-founder. But after a closer examination of the deal, Colony walked away from its bid.