Industry News

Home builder execs accused of insider trading

Lawsuit alleges company downplayed product problems

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A plaintiff identified only as TDH Partners has sued home builder Ryland Group and two of its top-level executives after they reported a substantial plunge in new-home orders at the end of 2003. Five law firms acting on behalf of a proposed class-action group of shareholders this month filed the lawsuit against Ryland, company CEO Chad Dreier and CFO Gordon Milne. The complaint accused them of securities violations, misrepresentation and insider trading in connection with the company's quarterly performance. Ryland Group is a nationwide home builder that specializes in single-family and semi-detached starter homes and homes for move-up buyers. Company executives shocked investors Jan. 8, when they reported new-home orders plunged 8.9 percent in the fourth quarter of 2003 from the same quarter in 2002. The sharp decline was unexpected and allegedly contradicted the executives' prior positive statements about production during the quarter, according to the 22-page complaint. "The d...