Ryland Group Executive Settles Insider Trading Charges

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A Ryland Group Inc. division president agreed Monday to settle civil insider trading charges that he sold shares in the L.A.-based homebuilder before it reported a drop in orders.


The Securities and Exchange Commission alleges that John D. Hutchinson, president of Ryland’s Dallas division, avoided a paper loss of roughly $100,000 in the fourth quarter of 2003 by exercising stock options and selling shares after finding out that new home orders would fall from the year-earlier period.


On Jan. 8, 2004, Ryland announced that new orders for the fourth quarter of 2003 fell by 8.9 percent from the year-earlier period. The largest decline was in Texas, where orders fell 32.9 percent.


The day the shortfall was announced, Ryland’s stock fell by 12.2 percent. The SEC declined to say how many Ryland shares Hutchinson sold before the shortfall was announced, only that he exercised “all of his exercisable options” and sold the underlying shares.


As part of the settlement, Hutchinson agreed to pay a $205,000 civil penalty without admitting or denying the allegations. The penalties included a civil penalty of $101,778, an equal amount in restitution and $1,180 in interest. Hutchinson, 53, was not barred from serving as an officer or director of a public company, and remains on the job.


“He’s still in his position this is a matter between him and the SEC,” said Marya Jones, a spokeswoman for Ryland. She referred additional questions to Hutchinson, who didn’t immediately return a call.

On Monday, Ryland shares fell $2, or 2.8 percent, to $69.55.

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