Homex Sinks to 12-Year Low as Mexican Builder Says SEC May Act

  • Company targeted for alleged violation of fraud rules
  • Builder reviewing financial statements from 2010 through 2012

Desarrolladora Homex SAB, which was once Mexico’s biggest homebuilder by revenue before sliding into bankruptcy, sank to a record low after the company said U.S. regulators may take action against it for alleged violations of fraud and reporting rules.

Shares of the Culiacan, Mexico-based company fell 6.3 percent on Friday to 3.13 pesos at at 1:40 p.m. in Mexico City, the lowest on a closing basis since they began trading in June 2004.

Homex said it’ll try to persuade the Securities and Exchange Commission from
bringing an enforcement action related to the company’s accounting practices.
The builder and its biggest rivals collapsed in 2013, spurring billions of
dollars of losses on stocks and bonds.

Homex has tumbled since the company’s stock started trading again after a 20-month suspension in October. In July, the company said that it concluded its bankruptcy proceedings and was “well-positioned to continue to restart its operations in accordance with its business plan.”

“This has to do with the company’s management,” said Aldo Miranda, an equity sales trader at CI Casa de Bolsa SA in Mexico City. “The company’s not in good shape. In the case that investors who lost decide to take legal action they could win, but it would take years. I do think this puts agreements at risk.”

The company said it’s reviewing its financial statements from 2010 through 2012 and shouldn’t be relied on until that process is complete. Homex said the U.S. regulator issued so-called Wells notices to the builder, Chief Executive Gerardo de Nicolas and Chief Financial Officer Carlos Moctezuma. Both the CEO and the CFO intend to take voluntary leave to deal with the matter, Homex said.

“The Wells notice does not constitute a determination by the Commission that any violation of law has occurred,” the company said in the filing dated May 5.

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