Toll Brothers (TOL) To Face Lawsuit By Investor Over Falsified Forecasts And Stock Sales

Bloomberg reports that after a court ruling, Milton Pfeiffer, an investor in Toll Brothers, Inc. (NYSE: TOL), can proceed with claims that company executives mislead shareholders about its prospects when they sold stock worth $615 million.

Toll Brothers officials will face investors’ claims that they issued misleading bullish forecasts for 2006 and 2007, as demand was falling for the company’s homes. The directors will also face charges that due to the false forecasts they sold shares at inflated prices.

Pfeiffer sued the company’s directors in 2008, accusing them of misguiding investors with forecasts indicating 20% increase in earnings.Pfeiffer filed a so-called derivative suit, which would return any recovery in the case to the company.