Toll Brothers Agrees to Settlement In Shareholder Class Action
November 2010 - To all persons who purchased or acquired Toll Brothers, Inc. (“Toll Brothers”) common stock beginning December 9, 2004 through and including November 8, 2005, you may be entitled to share in the proceeds of the settlement. The proposed Settlement creates a fund in the amount of $25,000,000.00 in cash (the “Settlement Amount”). Your recovery from this fund will depend on a number of variables, including the number of shares of Toll Brothers common stock you purchased or acquired during the period beginning December 9, 2004 through and including November 8, 2005 and the timing of your purchases, acquisitions, and any sales. A settlement hearing will be held on February 24, 2011, in Philadelphia, Pennsylvania. The purpose of the Settlement Hearing will be to determine: (1) whether the Settlement consisting of $25,000,000.00 in cash should be approved as fair, reasonable, and adequate to the Settlement Class; (2) whether the proposed plan to distribute the settlement proceeds (the “Plan of Allocation”) is fair, reasonable, and adequate; and (3) whether the application by Lead Counsel for an award of attorneys’ fees and expenses and payment of the expenses of the Lead Plaintiffs should be approved.
August 2008 - On August 29, 2008, U.S. District Court judge James T. Giles for the Eastern District of Pennsylvania denied Toll Brothers’ request to dismiss the case against it. According to Judge Giles, who did not rule on the merits of the case, the plaintiffs made claims specific enough in their complaint to survive Toll Brother’s request for dismissal.
Judge Giles also allowed plaintiffs to continue their claim that nine officers and directors of Toll Brothers, including Chief Executive Officer and Chairman Robert Toll and Vice Chairman Bruce Toll, engaged in insider trading during the time period Toll Brother’s allegedly made the false statements.
According to a press release dated April 18, 2007, the complaint charges Toll Brothers and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Toll Brothers is a home builder which specializes in building large, expensive homes.
Specifically, the complaint alleges that defendants made a series of false and misleading statements indicating that Toll Brothers’ business model, which was based on developing expensive homes for a niche market of high-end buyers, was unique and thus immune from the adverse impact of rising interest rates and other negative macro-economic factors that appeared to be negatively impacting the home-building industry during 2004 and 2005. As the truth was revealed to investors, including the deteriorating state of demand for Toll Brothers’ homes, its constrained and shrinking number of active selling communities, the insufficient inventory of lots for Toll Brothers to achieve 20% net income growth in 2006 and 2007, and the actual adverse impact of rising interest rates and negative macro-economic trends on traffic to Toll Brothers communities and demand for its homes and thus its future prospects, Toll Brothers stock plummeted, falling from its $58.25 per share Class Period high in July 2005 to as low as $33.72 per share on November 9, 2005, a 42% drop.