Beazer Homes said in a regulatory filing Monday that Securities and Exchange Commission staff issued a so-called Wells notice to CEO Ian McCarthy, citing an anti-fraud law provision allowing the government to "claw back" compensation in some instances.
The notification comes more than a year after Atlanta-based Beazer settled a Securities and Exchange Commission investigation into its financial statements.
The notice disclosed Monday means SEC staff intends to recommend to the full commission that civil charges be filed against McCarthy. Beazer said McCarthy intends to respond to the notice, which is not a formal allegation nor a finding of wrongdoing.
Beazer said SEC staff recommended action against McCarthy "to collect certain incentive compensation and other amounts allegedly due" under the clawback provision of the Sarbanes-Oxley Act of 2002. The company's filing did not disclose how much compensation is involved, or other details about the pay. Beazer spokeswoman Leslie Kratcoski declined to comment.
The company itself is not named in the notice.
Under Sarbanes-Oxley's Section 304, the government can try to claw back incentive-based compensation to executives covering periods when a company restated earnings. The broader law was an attempt to crack down on corporate America after accounting fraud at companies such as Enron and WorldCom.
In another case involving the clawback provision, the SEC in July said it was seeking more than $4 million from the former CEO of auto parts retailer CSK Auto Corp. That case accuses Maynard Jenkins of profiting while the Phoenix-based company allegedly defrauded shareholders. The SEC's lawsuit demands that Jenkins return the money - which was paid out in bonuses and stock sales - even though he is not facing fraud charges himself.
Beazer said in Monday's filing that SEC staff did not allege "any lack of due care" by McCarthy in connection with the company's financial statements.
Beazer did not admit or deny wrongdoing in September 2008 when it settled with the SEC after an investigation into the company's business practices in handling financial statements. Beazer said the probe focused on topics that the company's audit committee previously investigated.
According to Beazer's 2007 annual report, the audit committee's investigation of the company's mortgage origination business also discovered accounting and financial reporting errors that required restatements.
The SEC order instituting the settlement said Beazer "fraudulently misstated certain of its quarterly and annual net income by intentionally managing its earnings." The company underreported net income from about 2000 to 2005, which led to reserves used to smooth out Beazer's earnings and allow the company to meet Wall Street expectations in other periods. When the housing market began to decline in 2006, Beazer began reversing the reserves, the SEC found.
Beazer paid no fines or penalties under the settlement, but consented to a cease-and-desist order requiring future compliance.
In 2007, when the audit committee's investigation was under way, McCarthy received a compensation package valued at $3.2 million. More than half of it came from stock awarded to him as part of a bonus for his performance in 2006.
Shares of Beazer fell 28 cents, or 5.1 percent, to $5.21 in afternoon trading. The stock has ranged from 24 cents to $6.93 over the past year.