Sunday, October 4, 2015

Toll Bros. pays $16M in shareholder ripoff

Robert and Bruce Toll and top aides will split cost with their insurers

Toll Bros. pays $16M in shareholder ripoff

Toll Brothers said it is seeing some encouraging signs of a housing sector recovery.
Toll Brothers said it is seeing some encouraging signs of a housing sector recovery.

Writes Reuters here: "Luxury-home builder Toll Brothers Inc. (has)  agreed to pay $16.2 million to settle claims that they misled shareholders about the company's future prospects while reaping $615 million from sales of the company's stock.

"The settlement was filed Thursday in Delaware Chancery Court. If approved, it would resolve claims that several Toll Brothers directors -- including co-founders Robert and Bruce Toll -- went to great lengths to convince investors that the company was uniquely positioned to weather a downturn in the housing market, according to a 2008 lawsuit filed by Toll Brother shareholder Milton Pfeiffer.

 "The complaint accused the defendants of profiting from their rosy predictions, earning proceeds of more than $615 million from selling off millions of company shares between late 2004 and 2005. Even as concerns were raised about a potential housing bubble, the defendants went to great lengths to convince investors otherwise, it said...

"But in December 2005, management abruptly lowered its annual growth projections for 2006 to just 0.5 percent...  As part of the settlement, the defendants denied they traded on any non-public insider information about the company, breached their fiduciary duties or made misleading statements about the company...

"Toll Brothers' insurers will pay $9.8 million of the settlement amount, while the executive defendants will pay the remaining $6.45 million, according to settlement papers. The settlement would resolve the 2008 Delaware lawsuit, as well as two other investor lawsuits filed in a Pennsylvania federal court, settlement papers showed."

Case is Pfeiffer v. Toll et al., in the Delaware Chancery Court, no. 4140-VCL.

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PhillyDeals posts drafts, transcripts and updates of Joseph N. DiStefano's columns and stories about Philly-area business, which he's been writing since 1989.

DiStefano studied economics, history and a little engineering at Penn and taught writing at St. Joseph's. He has written thousands of columns and articles for the Inquirer, Bloomberg and other media, wrote the book Comcasted, and raised six children with his wife, who is a saint.

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