Shares of KB Home jumped late Wednesday after the homebuilder said that the Securities and Exchange Commission had completed its investigation into potential accounting and disclosure violations by the company and would not recommend any enforcement action.
The SEC began the investigation of the Los Angeles company last year. A year earlier, former chairman and chief executive Bruce Karatz paid nearly $7.2 million to settle SEC charges of backdating stock options. A Los Angeles federal jury in April found Karatz guilty of two counts of mail fraud in connection with the case. He has appealed.
"We are glad to share with our investors and employees that the matter is now behind us, as we continue to focus on restoring the sustained profitability of our homebuilding operations and generating future growth," said Chief Executive Jeffrey Mezger in a statement.
KB Home made the announcement about an hour before the markets closed. Shares ended the day up $1.14, or 11 percent, to $11.45 on the New York Stock Exchange.
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