This is a securities fraud class action lawsuit against Beazer Homes USA its independent audit firm Deloitte & Touche and certain of Beazer Homes officers and directors.
Beazer Homes designs, sells and builds primarily single-family homes in various locations within the United States and provides mortgage origination and title insurance services to its homebuyers.
The class action complaint alleges that during the Class Period Beazer Homes issued false and misleading statements regarding the Beazer Homes's business and prospects and failed to disclose to the investing public the following adverse facts:
(a) Beazer Homes lacked requisite internal controls over its lending practices, which, as a result of its improper lending practices prior to and during the Class Period, would lead to numerous foreclosures and other problems;
(b) Beazer Homes business was growing in large part due to its improper lending practices to low-income borrowers;
(c) many of the Beazer Homes's buyers would not be able to pay their loans after the first two years, which would lead to decreased sales and earnings and numerous foreclosures; and
(d) given the increased volatility in the lending market, Beazer Homes had no reasonable basis to make projections about its 2007 results and as a result, Beazer Homes' 2007 projections issued during the Class Period were at a minimum reckless.
As a result of defendants' false statements, Beazer stock traded at artificially inflated prices during the Class Period, reaching a high of $48 per share in December 2006, and the Company's CEO and CFO were able to sell over $9.7 million worth of their Beazer stock. The class action complaint further alleges that on March 18, 2007, The Charlotte Observer reported that federal housing officials were reviewing whether Beazer complied with federal rules in arranging government-insured loans for buyers in its subdivisions.
On March 21, 2007, Beazer announced the resignation of its CFO. Then, on March 27, 2007, after the market closed, Beazer issued a press release responding to media reports and inquiries into the possibility of a federal investigation of BEazer in connection with alleged mortgage fraud.
On this news, Beazer's stock fell $2.64 per share to close at $28.77 per share on March 28, 2007, a one-day decline of 9% and a 40% decline from its Class Period high of $48 per share.
Name (Stock Symbol)
Beazer Homes USA, Inc. (BZH)
Beazer Homes USA, Inc. is a home builder operating in 40 markets in the US.
Deloitte & Touche
Deloitte & Touche is a global accounting and consulting firm.
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