ESTATE


Beazer Homes settles federal securities fraud case for $30.5 million
2009/05/11, 6:48 pm
Filed under: 1 | Tags: , , ,

The national homebuilder admitted no wrongdoing but agreed to settle the case that alleged it misled investors about its lending practices. On Friday, Beazer Homes reported a loss of $114 million for the quarter ended March 31, including losses related to a federal investigation of its lending.

 

 

By Ashley Fletcher Frampton
aframpton@scbiznews.com
Published May 11, 2009

National homebuilder Beazer Homes, which has communities in the Charleston area, has agreed to settle a securities class action lawsuit that alleged the Atlanta-based homebuilder misled investors about its home financing and business practices.

The $30.5 million settlement, if approved by the court, would end the case originally filed in March 2007 in the U.S. District Court for the Northern District of Georgia.

In the settlement agreement, Beazer Homes admitted no wrongdoing.

In the consolidated lawsuit, lead plaintiffs Glickenhaus & Co. and Carpenters Pension Trust Fund for Northern California claimed that Beazer artificially inflated its stock price by presenting false statements about its business success.

The lawsuit claimed that Beazer had been making improper loans to low-income buyers, some of whom would not be able to pay for them. Meanwhile, the homebuilder issued overly optimistic financial outlooks, the lawsuit said.

Beazer’s lending practices prompted an investigation by federal officials and critical news stories in The Charlotte Observer, both of which caused stock prices to fall, the lawsuit said.

Beazer stock reached a high of $48 per share in December 2006, the lawsuit said. Today, the homebuilder’s stock is trading at $3.09 per share.

The class in the lawsuit includes purchasers of the company’s common stock between Jan. 27, 2005, and May 12, 2008.

On Friday, Beazer Homes reported a loss of $114 million, or $2.97 per share, for the quarter ended March 31. In the same quarter last year, Beazer lost $228.7 million, or $5.93 per share.

In its earnings statement, the homebuilder said an investigation by the U.S. Attorney for the Western District of North Carolina is ongoing, and the company recognized a total of $13 million for the quarter in expenses related to the investigation.

The company said homebuilding revenue declined 53.2% for the quarter because of a 48.1% decline in home closings and a 9.9% decline in the average selling price of homes closed compared with the same period of the prior year.

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[…] about Atlanta Real Estate as of May 12, 2009 Beazer Homes settles federal securities fraud case for $30.5 million – liquidmarket.wordpress.com 05/11/2009 The national homebuilder admitted no wrongdoing but agreed […]

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