| NEW YORK
NEW YORK Dec 6 Officials at luxury-home builder
Toll Brothers Inc. have 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
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.
From late 2004 until late 2005, Toll Brothers executives
stuck by projections of 20 percent net income growth in 2006 and
2007, the complaint said.
But in December 2005, management abruptly lowered its annual
growth projections for 2006 to just 0.5 percent, which received
a negative reaction from analysts and shareholders, according to
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. Representatives for Toll Brothers could not
be immediately reached for comment Thursday evening.
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.
Lawyers for the plaintiffs said in the filing that the
settlement "is in the best interest of the parties and Toll
Brothers' current stockholders."
The case is Pfeiffer v. Toll et al., in the Delaware
Chancery Court, no. 4140-VCL.