Securities and Exchange Commission launches investigation into St. Joe

Jul 5, 2011

The following article was published in The Florida Current on July 5, 2011:

SEC launches investigation into St. Joe

By Bruce Ritchie 

The St. Joe Co. says the Securities and Exchange Commission has begun a “private investigation” of the company’s business practices. The company’s stock price dropped 10 percent Tuesday following the announcement.

St. Joe owns 574,000 acres including 300,000 acres around the new airport in Bay County. Former Gov. Charlie Crist was named to the company’s board of directors on Feb. 28 as nominee of The Fairholme Fund and its president, Bruce Berkowitz, who now is the St. Joe Co. board chairman.

St. Joe, the developer of SouthWood in Tallahassee, and WaterSound and WaterColor developments in the Panhandle, said in January that the SEC was conducting an informal inquiry into the company’s policies and practices concerning the impairment of investment in real estate assets. 

In a current report filed on Friday, St. Joe said the SEC had issued an order of private investigation on June 24 for a period beginning Jan. 1, 2007. The investigation covers a variety of matters including reporting compliance by anyone owning more than 5 percent of the company’s common stock including Fairholme Funds Inc., Fairholme Capital Management LLC and Berkowitz.

Berkowitz, whose firm owns about 29 percent of St. Joe, was named chairman in March. Chief Executive Officer Britt Greene and three other board members resigned Feb. 28 after Berkowitz criticized their spending and corporate governance, according to the San Francisco Chronicle.

Berkowitz told Bloomberg news on Tuesday there is “not a lot new” in last week’s announcement.

“It was my decision” to disclose the stepped-up probe, Berkowitz said Tuesday in an interview with Bloomberg Television’s “Inside Track.” Berkowitz said he made the filing so St. Joe wouldn’t be hindered in resuming a stock-purchase program.

An SEC spokeswoman declined to comment.

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