Big builder KB Home revealed in a Securities Exchange Commission filing that the federal regulator is examining the company’s accounting. The stock fell about 6% today.
The filing doesn’t offer much information. A spokesperson says: “KB Home strives to operate its business with the utmost transparency and integrity, and in accordance with generally accepted accounting principles. While the SEC has not specified the subject matter and we cannot speculate on it at this time, we understand that part of the SEC’s mandate is to conduct these sorts of investigations, which it has done with hundreds of public companies over the past few years.”
KB is still dealing with the legal fallout of some of its previous business practices. In 2006, then ceo Bruce Karatz resigned in a scandal involving the back dating of stock options. He later paid $7 million to settle charges with the SEC, but the company is still wrestling with shareholder suits regarding the matter. In 2005, KB paid $3.2 million to settle complaints its mortgage unit was qualifying buyers for government loans who didn’t meet the criteria.
Here’s the full text of the mention in Friday’s SEC filing:
On October 2, 2009, the staff of the SEC notified the Company that a formal order of investigation had been issued regarding possible accounting and disclosure issues. The staff has stated that its investigation should not be construed as an indication by the SEC that there has been any violation of the federal securities laws. The Company is cooperating with the staff of the SEC in connection with the investigation. The Company cannot predict the outcome of, or the timeframe for, the conclusion of this matter.
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.