UPDATE: Beazer Promotes CFO To CEO Post As McCarthy Exits

In a surprise move, builder Beazer Homes USA Inc. (BZH) named Chief Financial Officer Allan Merrill as its new chief executive. He replaces Ian J. McCarthy, whose troubled tenure included a federal probe into Beazer's lending practices and a settlement with the Securities and Exchange Commission over accounting issues.

Merrill, who has spent four years with the Atlanta-based company and led its debt-reduction effort, will also serve as president and on the board, according to the company's press release.

Robert Salomon, currently the company's chief accounting officer, replaces Merrill.

McCarthy, 57 years old as of December's proxy filing, has worked with Beazer since its initial public offering in 1994. He oversaw the company during the housing boom and the resulting bust.

In March, he agreed to repay $6.5 million and return tens of thousands of shares of company stock as part of a settlement with the SEC.

In 2009, the company agreed to pay $53 million to the federal government and homeowners after a joint federal probe found that the builder had given government-backed loans to borrowers who couldn't afford them.

A year earlier, Beazer settled civil allegations brought by the SEC over the company's accounting practices without admitting any wrongdoing. Beazer understated earnings by a total of about $63 million in fiscal years 2000 to 2005 and overstated them by $47 million between 2006 and early 2007.

Still, the company thanked McCarthy and wished him success in the future.

"Over many years, Ian McCarthy has ably guided the company to its current position as one of the ten largest home builders in the United States," Chairman Brian Beazer said in the release. "During this time, the home building industry and the company have experienced many complex issues which Ian has dealt with to the benefit of the company."

In early trading Monday, shares rose 10 cents to $3.25.

-By Dawn Wotapka, Dow Jones Newswires; 212-416-2193; dawn.wotapka@dowjones.com

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