KB Home Says SEC Investigating Accounting

NEW YORK -- The Securities and Exchange Commission is investigating homebuilder KB Home (KBH Quote) for possible accounting and disclosure violations, according to a regulatory filing.

In its quarterly filing with the SEC on Friday, KB Home said it is cooperating with the investigation and cannot predict its outcome or time frame. The Los Angeles-based company and the SEC couldn't immediately be reached for comment Sunday.

KB Home added it doesn't believe any liabilities or costs that might stem from the investigation will have a material effect on its financial position or results of operations.

KB Home has faced regulatory scrutiny before. In September 2008, the homebuilder's former chairman and CEO, Bruce Karatz, paid nearly $7.2 million to settle SEC charges of backdating stock options. The SEC had alleged that Karatz engaged in backdating practices from at least 1999 through 2005 and profited more than $6 million from exercising these options. In the settlement, Karatz didn't admit or deny the allegations.

Last month, the company reported a narrower third-quarter loss as new home orders surged 62% from a year earlier and its cheaper-to-build Open Series homes helped bring down costs. KB also saw fewer buyers back out of their contracts. While the builder's results offered new signs that the housing market is on the mend, the results still failed to meet Wall Street expectations.

In the filing, KB said it expects market conditions to change little through the remainder of the fiscal year.

"We anticipate reporting lower year-over-year revenues and homes delivered in the 2009 fourth quarter, but improved year-over-year bottom line results," the company said in the filing.