Former KB Home Chief Executive Bruce Karatz has agreed to pay $7.2 million to settle U.S. Securities and Exchange Commission charges that he fraudulently backdated stock options issued to himself and other employees for at least six years, the SEC said on Monday.
The SEC alleged that Karatz engaged in backdating practices at the Los Angeles homebuilder from at least 1999 through 2005, and personally profited more than $6 million from exercising those options, according to an SEC press release. Karatz did not admit to or deny the charges, but has agreed to be barred from serving as an officer or director of a public company for five years.
Karatz will pay $6.7 million in charges and a $480,000 penalty to settle the charges, including the accusation he approved inaccurate SEC filings.
"Karatz improperly increased his compensation by millions of dollars without telling KB Home shareholders,'' said Linda Thomsen, the SEC's enforcement head, in the statement.
Karatz stepped down as KB Home's chairman and chief executive in November 2006 after an internal investigation.
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