Kb homes and backdating
A stock option allows an employee to purchase a company’s stock at a preset price at a future date.
At trial, former human resources head Gary Ray said his ex-boss helped engineer and benefited from a shift in company policy for awarding stock options, then tried to conceal his moves from investors.
Karatz’s lawyers argued that he didn’t knowingly break any laws and questioned Ray’s credibility, noting that he pleaded guilty last year to conspiracy to obstruct justice and agreed to testify in return for leniency.
Karatz agreed to pay some $7 million in September to settle civil charges of backdating stock options but did not admit any wrongdoing.
The homebuilder said the Securities and Exchange Commission has concluded its investigation into the company’s accounting and disclosures and does not plan to recommend any enforcement action.
A federal jury in Los Angeles found Bruce Karatz guilty of two counts of mail fraud, one count of lying to company accountants and one count of making false statements in reports to the Securities and Exchange Commission. The 64-year-old former CEO showed no emotion as the verdicts were read. “We will continue to fight those counts because he’s innocent of them. Karatz’s eventual vindication of the last 20 percent of this case.” It was the second time that top officials of high-flying California companies had been accused of criminally manipulating stock options.
He remains free on bond and faces up to 80 years in prison when he is sentenced Sept. Defense attorney John Keker said he was disappointed at the four convictions despite his client’s acquittal on the other charges. Last year, a federal judge in Orange County threw out similar cases against Broadcom co-founders Henry Samueli and Henry T. District Judge Otis Wright refused to allow Karatz’s attorneys to pursue similar misconduct claims, saying he found no evidence of wrongdoing.Karatz, Ray and another KB Home executive were forced out in 2006 after the homebuilder discovered stock options had been favorably dated between 19.The probe found that no other senior executives had a role in the backdating scheme.Earlier, a lawsuit filed against the same parties alleged they fraudulently inflated sales prices of KB homes in Arizona and Nevada. The homebuilder said the Securities and Exchange Commission has concluded its investigation into the company’s accounting and disclosures and does not plan to recommend any enforcement action. The answers would be instructive to other companies that could wind up as targets of SEC probes. The good news here is that the SEC informed the company that the investigation was closed. Believe it or not until a few years ago the regulator did not often communicate to companies under investigation that the probe was completed and that no further action would be taken, leaving the company hanging and suspicion hovering for all potential customers and investors to speculate.The letter from the regulator concludes the SEC’s investigation, which began in October 2009.“We are pleased to announce that the SEC has concluded its investigation,” said Jeffrey Mezger, president and chief executive officer of KB Home, in a statement. Their attitude at the time was that as a policy, the Commission does not disclose the existence of an investigation in the first place, so it typically won’t announce that one has ended. The company was embroiled in the options backdating scandal.LOS ANGELES (Reuters) - Former head of KB Home Bruce Karatz was sentenced to eight months home detention on Wednesday, much lower than what the government had requested in one of its highest profile prosecutions of illegal stock option backdating.Tags: Adult Dating, affair dating, sex dating