SEC ends its probe, First American says

First American Corp. of Santa Ana, the biggest U.S. title insurer, said the Securities and Exchange Commission had ended an investigation into the company’s former stock option granting practices without recommending any enforcement action.

The SEC opened an informal inquiry after First American announced it was conducting its own review last August. The insurer was notified this week that the probe had ended, it said in a regulatory filing Thursday.

U.S. investigators are trying to determine whether companies inflated the value of options by backdating, or timing the grants to coincide with days when the stock price was low. At least 200 companies have disclosed internal or federal investigations, and 100 announced they must restate financial results.

First American shares gained 74 cents to $50.64.

First American in January restated earnings for the first quarter of 2006 and the prior five years after its review found mispriced stock options with a cumulative impact of $35.7 million on the company’s financial results.

It didn’t find evidence that the errors were the result of “fraud” or “self-interest” by directors or management, it said in a regulatory filing.

First American is the No. 1 title insurer by 2006 premium revenue, ahead of Jacksonville, Fla.-based Fidelity National Financial Inc., according to a trade group.