SAN FRANCISCO (Dow Jones) -- The Securities and Exchange Commission will be conducting an informal inquiry into the KB Home's stock option grants, company officials said Thursday evening.

The Los Angeles-based homebuilder, which said its board audit and compliance committee is conducting an internal review, added that it plans to cooperate with the SEC.

On Wednesday, KB Home , with a market capitalization of $3.8 billion, said it is reviewing stock option grants given to Chief Executive Bruce Karatz, who is reported to have received nearly $100 million from cashing out options dated when shares traded at relative lows.

The Wall Street Journal reported that among four grants to Karatz between 1998 and 2001, one was dated when the shares were at an annual low, another at a quarterly low and the other two at monthly lows.

KB Home, as well as certain of its directors and officers, are also facing three shareholder derivative suits, filed in the past two months, alleging breach of fiduciary duty in connection with the stock option grants.

KB Home shares closed Thursday at $41.18, up 1.6 percent. (END) Dow Jones Newswires 08-25-06 0020ET Copyright (c) 2006 Dow Jones & Company, Inc.