WILMINGTON, Del. (CN) – Directors of homebuilder Toll Brothers traded on inside information to cash in $615 million in stock at prices they inflated through false and misleading statements, shareholders say in a class action. The COO and other officers sold as much as 90% of their shares, acts “suspicious in timing and amount, as they far exceeded the insiders’ recent history of stock sales,” according to the Chancery Court complaint.
Shareholders say company directors drove the stock price from $28.50 in late 2004 to more than $58 in July 2005 through forecasts that they knew were untrue. By December 2007, share price had collapsed to $20.
“Plaintiff, on behalf of Toll Brothers, alleges that Toll Brothers’ directors, including a majority of its current board, sold stock of Toll Brothers while in possess of material adverse inside information regarding the company’s deteriorating prospects, and seeks disgorgement to the company of unlawful insider trading profits.”
Named as defendants are Bruce Toll, Robert Toll, Zvi Barzilay, Robert Blank, Joel Rassman, Richard Bramer, Paul Shapiro, Carl Marbach, and Toll Brothers Inc.
Plaintiffs are represented by Carmella Keener with Rosenthal Monhait & Goddess.