Case Update - 05/05/2009
Beazer Homes USA, Inc. (NYSE: BZH) announced that it has reached an agreement with lead plaintiffs to settle the consolidated putative securities class-action lawsuit originally filed in March 2007 in the United States District Court for the Northern District of Georgia.

Under the terms of the proposed settlement, the lawsuit will be dismissed with prejudice, and Beazer Homes USA, Inc. and all other defendants do not admit any liability and will receive a full and complete release of all claims asserted against them in the litigation, in exchange for the payment of an aggregate of $30.5 million. The monetary payment to be made on behalf of Beazer Homes USA, Inc. and the individual defendants will be funded from insurance proceeds. As a result, there will be no financial contribution by Beazer Homes USA, Inc.. The agreement is subject to court approval.

As stated in the settlement documents, Beazer Homes USA, Inc. denies any liability in connection with the litigation and denies the claims asserted by the plaintiffs in the complaint. However, Beazer Homes USA, Inc.believes this settlement is in the best interest of Beazer Homes USA, Inc. and its stakeholders, as it eliminates the uncertainties, distractions, burden and further expense associated with this litigation.

Original Post - 11/26/2008

<p>According to a press release dated March 29, 2007, the complaint charges Beazer and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Beazer designs, sells and builds primarily single-family homes in various locations within the United States and provides mortgage origination and title insurance services to its homebuyers.</p>
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<p>Specifically, the complaint alleges that during the Class Period defendants issued false and misleading statements regarding the Company’s business and prospects and failed to disclose to the investing public the following adverse facts: (a) the Company lacked requisite internal controls over its lending practices, which, as a result of its improper lending practices prior to and during the Class Period, would lead to numerous foreclosures and other problems; (b) the Company’s business was growing in large part due to its improper lending practices to low-income borrowers; (c) many of the Company’s buyers would not be able to pay their loans after the first two years, which would lead to decreased sales and earnings and numerous foreclosures; and (d) given the increased volatility in the lending market, the Company had no reasonable basis to make projections about its 2007 results and as a result, the Company’s 2007 projections issued during the Class Period were at a minimum reckless. As a result of defendants’ false statements, Beazer stock traded at artificially inflated prices during the Class Period, reaching a high of $48 per share in December 2006, and the Company’s CEO and CFO were able to sell over $9.7 million worth of their Beazer stock.</p>
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<p>The complaint further alleges that on March 18, 2007, The Charlotte Observer reported that federal housing officials were reviewing whether Beazer complied with federal rules in arranging government-insured loans for buyers in its subdivisions. On March 21, 2007, Beazer announced the resignation of its CFO. Then, on March 27, 2007, after the market closed, the Company issued a press release responding to media reports and inquiries into the possibility of a federal investigation of the Company in connection with alleged mortgage fraud. On this news, Beazer’s stock fell $2.64 per share to close at $28.77 per share on March 28, 2007, a one-day decline of 9% and a 40% decline from its Class Period high of $48 per share.</p>
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