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Class action alleges breach of fiduciary duties as a result of investments by the home builder's 401(k) plan in company stock.
Stephen Taub, CFO.com | US
May 4, 2007
Beazer Homes USA has disclosed that it is the subject of a new class-action lawsuit filed on behalf of present and former participants and beneficiaries of the Beazer Homes 401(k) plan. The lawsuit names as defendants Beazer Homes, certain current and former officers and directors, and the plan's benefits-administration committee.
The complaint, filed in U.S. District Court for the Northern District of Georgia, alleges breach of fiduciary duties under the Employee Retirement Income Security Act as a result of investments by the plan in Beazer stock when participants allegedly were not provided timely, accurate, and complete information about the company.
As of December 31, 2005, Beazer stock accounted for 43.65 percent of the plan's assets, according to Reuters.
The company also disclosed that the Securities and Exchange Commission has launched an informal inquiry to determine whether federal securities laws were violated. In its regulatory filing, the home builder offered no further details, other than to add that it intends to cooperate fully. Beazer asserted in its filing that it has found no evidence to support the allegations and intends to vigorously defend the action.
Beazer earlier disclosed that its audit committee has launched an internal probe into the company's mortgage-origination business, which according to Reuters is already the subject of several lawsuits and a federal investigation. According to the wire service, the newly filed lawsuit asserts that Beazer's stock began to fall after a March 18 article in The Charlotte Observer, which reported that Beazer was being investigated by federal housing officials about questionable loans arranged by its mortgage unit.