Let's see, what caused the most grief for KB Home shareholders today - the company reviewing questionable dates of stock options granted to CEO Bruce Karatz (see earlier post on Wednesday morning headlines), or a report showing a worse-than-expected decline last month in the number of existing homes sold nationwide? We'll just call it a combo platter. KB Home slumped $2.66, or 6.2 percent, to $40.53 - Wednesday's biggest loss in the S&P 500. Not helping matters: JP Morgan Securities analyst Michael Rehaut downgraded the shares. He said in a reseach note that a shareholder lawsuit related to the options grants "will create an overhang on the stock and lead to relative underperformance." No kidding. KB spokeswoman Caroline Shaw said the company has been reviewing these grants with the assistance of outside counsel. "Because they are the subject of pending litigation, we will not comment on them," she told Reuters.

Backgrounder: Will the SEC's investigation into stock options grants, along with new requirements on disclosing executive and director benefits, make any difference in the way the big boys behave?