SEC inquiry at KB

The L.A.-based homebuilder announced late this afternoon that the Securities and Exchange Commission will be conducting an informal inquiry into the company's stock option grants. The disclosure comes a couple of days after it was reported that KB Home was conducting an inquiry into the awarding of certain options to CEO Bruce Karatz. All this started with a shareholder lawsuit that accused the company of backdating those option grants to coincide with low points in the company's stock price. The stock then goes up - and with the recent housing boom it went up a lot - and Karatz was able to make an enormous profit. On Wednesday, the Wall Street Journal laid out just how well Karatz did. In 2005, according to the L.A. Times, Karatz received $156 million in executive compensation, 75 percent of which came from exercising options. Shares of KB took a hit on Wednesday, but they recovered on Thursday. The stock was up 1.6 percent, to $41.18. Of course, that was before the SEC announcement.