KB Home says SEC investigation over
Shares of Los Angeles-based KB Home soared on Wednesday after the home builder said an investigation by the Securities and Exchange Commission into the company’s accounting and disclosure procedures had concluded and no enforcement action would be taken.
The company said in a statement Wednesday that it had received a letter from the commission closing the investigation, which began in October. Details of the inquiry weren’t disclosed. KB Home closed at $11.45, up $1.14, or 11%.
“We are glad to share with our investors and employees that the matter is now behind us, as we continue to focus on restoring the sustained profitability of our home building operations and generating future growth” KB Home Chief Executive Jeffrey Mezger said.
In June, Mezger told analysts during a conference call that government investigators had been requesting information regarding impairments of the company’s communities and joint venture investments.
Stephen East, an analyst with Ticonderoga Securities, said that the builder had been pushing the government agency to take action or close the investigation.
“This is a clear win for KBH,” East said, referring to the company by its ticker symbol. “It removes an overhang that we felt was dubious to begin with as KBH is one of the more conservative builders from an accounting perspective.”
In April, former KB Home CEO Bruce Karatz was convicted on four felony charges related to the manipulation of executive stock options. A federal jury found Karatz guilty of two counts of mail fraud and one count each of making false statements in a regulatory filing and of lying to the company’s accountants. He was acquitted on 16 other charges.