KB Home says SEC probing stock option grants

/ Source: The Associated Press

Homebuilder KB Home said Friday that the Securities and Exchange Commission has launched a formal investigation into its stock option granting practices.

In a regulatory filing, the company said it was cooperating with the SEC probe.

Last August, KB Home, which is headquartered in Los Angeles, received an informal inquiry from the SEC relating to its option practices.

The company's chief executive officer, Bruce Karatz, was forced to stepped down in November after it was disclosed that he was the beneficiary of favorably dated option awards.

The Wall Street Journal reported last August that several of the stock option grants to Karatz between 1998 and 2001 were dated at unusually low points in the company's stock price.

Karatz agreed to retire and to repay KB Home $13 million after an internal report concluded the home construction company incorrectly reported stock option grants.

About 107 companies are currently under scrutiny by the SEC or the Department of Justice for possibly backdating stock-option grants, and at least 92 other companies not facing a federal probe have launched or completed internal reviews into their stock options practices.