Toll Brothers investor gets judge's OK to proceed with suit against executives

An investor in Toll Brothers Inc., the largest U.S. luxury homebuilder, can proceed with claims executives misled shareholders about the company's prospects while they sold stock worth $615 million, a judge ruled. Toll Brothers officials must face investors' claims they improperly issued bullish forecasts for fiscal years 2006 and 2007 in the face of falling demand for the company's homes, Delaware Chancery Court Judge Travis Laster concluded.

The directors also must confront allegations they sold shares at inflated prices because of the forecasts, the judge said. "Coupled with massive sales of securities," statements by officials touting Toll Brothers' performance amounted "to a red flag," Laster said in his 49-page ruling. Toll Brothers shareholder Milton Pfeiffer sued the company's directors in November 2008 accusing them of misleading investors with the forecasts, which included a 20 percent increase in earnings. Executives made the predictions in 2005 for the coming two fiscal years. The executives made the predictions while knowing fewer prospective customers were visiting Toll Brothers communities, the suit alleges.

http://www.delawareonline.com/article/20100307/BUSINESS/3070345/1003/Cou...