An activist investment group affiliated with several trade unions and the union-backed organization Change to Win today issued a blistering attack on Beazer Homes USA CEO Ian McCarthy, calling on the Beazer board to "immediately remove" him.
The group, called the CtW Investment Group, put out a statement that was picked up by the Associated Press and CNBC that alleges McCarthy "allowed Beazer to violate federal law, improperly account for land development costs and sale-leaseback transactions and provide undisclosed loans to executives." It also dispatched a lengthy letter to the Beazer board detailing its allegations and calling for the ouster of both McCarthy and non-executive chairman and founder, Brian Beazer, with the latter replaced by an independent board chairman.
Representatives of Beazer could not immediately be reached for comment.
In detailing specifics concerning loans given by Beazer Mortgage to three executives, including McCarthy, CtW is apparently raising an issue beyond the already well-reported federal investigations into Beazer's mortgage lending unit and the turnover in its executive ranks. The group claims that since the loans were for homes that were not Beazer homes, they constitute corporate personal loans, which it claims are are prohibited by the Sarbanes Oxley Act of 2002.
CtW Investment Group is not actually an investor but advises the union pension funds with which it is affiliated. The affiliated unions have 6 million members with approximately $1.5 trillion in pension fund assets. It was formed in 2006 and has petitioned the boards of several companies, including Rite Aid, CVS and Countrywide Mortgage.