Toll Brothers agreed to pay $25 million to settle a federal lawsuit that alleged the company misled investors about its ability to weather the slump in the housing market.
The $480 million Hialeah (Fla.) City Employees' Retirement System sued in April 2007, claiming directors at the largest U.S. luxury-home builder misrepresented demand for Toll's new homes in fiscal year 2005 and growth projections for 2006. The $1.4 billion Laborers Pension Trust Fund for Northern California, Fairfield, joined as co-plaintiff seeking to represent investors who bought shares from Dec. 9, 2004, to Nov. 8, 2005. Toll denies any wrongdoing.
Toll and its board “wish to eliminate the uncertainty, risk, burden and expense of further litigation, and to permit the operation of the company's business without further distraction,” according to settlement papers filed Oct. 28 in U.S. District Court in Philadelphia.
Toll in August reported its first quarterly profit since 2007. The homebuilder, based in Horsham, Pa., recorded a $26.5 million third-quarter gain from a tax benefit, ending a streak of 11 straight quarterly losses.
Kira McCarron, a spokeswoman for Toll, didn't immediately return a phone call and e-mail seeking comment on the settlement.