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Tuesday, September 22, 2009

Franklin Sues Beazer

News summary by MFWire's editors

Franklin Mutual Beacon Fund is suing Beazer Homes USA Inc. to recover losses created by the home builders' exectives misleading statements to investors. The fund filed the suit in U.S. District Court, Northern District of Georgia in Atlanta (Franklin Mutual Beacon Fund v. Beazer Homes USA Inc., 09-cv-2578).

Beazer Homes USA settled federal allegations of mortgage fraud in July. The case arose from statements made in 2006 and 2007 that the SEC alleged contained misrepresentations and ommissions that caused its stock to trade at inflated prices. Beazer settled the U.S. Department of Justice charges on July 1 by agreeing to pay $53 million in fines and penalties. It had earlier settled with the SEC by agreeing to cease the misconduct.

According to a Bloomberg news report, Franklin contends that the company's mortgage originators "were violating a host of legal requirements concerning down payment assistance programs, stated income loans and other matters." The suit adds that "These unlawful activities exposed Beazer to huge losses when its misconduct was revealed." 

Edited by: Sean Hanna, Editor in Chief

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