The L.A. homebuilder issued a release this afternoon saying that the Department of Justice is looking into KB's past stock options practices but that the company itself is not a target. Earlier, Bloomberg News quoted unnamed sources as saying that KB itself was under criminal investigation. What all this suggests is that the company is desperately trying to distance itself from former CEO Bruce Karatz and former human resources head Gary Ray, who are at the center of the backdating inquiry. KB's internal investigation concluded that only Karatz and Ray were involved in the backdating. Representatives for both men deny they did anything wrong. Be advised, this one will take a while to sort out.
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