On May 14, the SEC filed a settled enforcement action against Gary A. Ray, the former VP of human resources at L.A.-based homebuilder KB Home, Inc., alleging that Ray used hindsight to pick advantageous grant dates for KB Home’s annual stock option grants in order to enrich himself and others at KB Home. The SEC alleged that on many occasions, the grant dates coincided with dates of low monthly closing prices for the company’s common stock.
As a result of this the backdating scheme, the SEC alleged, KB Home filed proxy statements with the SEC that inaccurately stated that KB Home granted options at market value on the date of the grant. Ray allegedly profited more than $480,000 from exercising many of these options.
As part of the settlement, Ray agreed to pay $540,651.58 in disgorgement and interest, and a civil penalty of $50,000, and also agreed to a bar that prohibits him from serving as an officer or director of a public company for five years.