The chief executive of Beazer Homes USA Inc. will give back about $6.5 million in bonuses and profits from sales of company stock from a time when federal regulators say the homebuilder was committing accounting fraud.
The Securities and Exchange Commission announced a settlement with Beazer CEO Ian McCarthy on Thursday. McCarthy agreed to reimburse the company $6,479,281 in cash and stock, representing his compensation for the fiscal year ended Sept. 30, 2006. He neither admitted nor denied wrongdoing.
Regulators said Beazer falsely recorded some home-financing transactions and manipulated other results to inflate profits that year.
McCarthy wasn't personally charged in connection with the accounting violations. But a landmark anti-fraud law enacted in 2002 requires senior executives to repay bonuses, other incentive pay and stock profits they received during a period in which the company violated financial reporting rules. The SEC is empowered to recoup the money for the company in what is called a "clawback."
"The SEC can claw back for the company incentive cash and equity-based compensation and stock profits earned by the company's CEO, even if he did not engage in the misconduct," Beazer said in a statement. "In resolving the claim against Mr. McCarthy, the SEC did not personally charge him with engaging in the underlying misconduct or allege that he otherwise violated the federal securities laws."
SEC Enforcement Director Robert Khuzami said the agency's clawback authority "provides an important incentive for senior executives to be vigilant in preventing misconduct and ensuring that companies comply with financial reporting requirements."
Atlanta's Beazer Homes, one of the largest U.S. homebuilders, settled civil accounting fraud charges with the SEC in September 2008. Federal prosecutors filed criminal fraud conspiracy charges against the company in July 2009. In a deferred prosecution agreement, Beazer accepted responsibility for fraudulent mortgage-making and accounting practices, and agreed to pay up to $50 million in restitution.
Beazer got out of the mortgage business in February 2008.
The company's shares rose 11 cents to end at $4.72 Thursday.