WATERSOUND — Following a four-year investigation into St. Joe Co. real estate valuations, the U.S. Securities and Exchange Commission (SEC) formally announced intentions to file charges against the company.
A Jan. 20 SEC filing indicates the company received a “Wells Notice,” a “preliminary determination” to file action against the Northwest Florida land giant for violating certain federal securities laws concerning “impairment of investments in real estate assets.”
St.Joe officials declined to comment on the investigation.
The valuations in question date to the company’s financial results for 2009, 2010 and other prior periods. Around that time, St. Joe (NYSE: JOE) came under fire from hedge fund manager David Einhorn of Greenlight Capital Inc., who accused the company of overvaluing its land holdings.
The SEC notice indicates all allegations occurred prior to 2011, before the company replaced its board of directors, chief financial officer and chief executive officer.
“The Wells Notice allegations involve former employees and one current non-executive officer and the Wells Notice is not directed towards any of the company’s current or recently retired directors or executive officers or any of its controlling shareholders,” it reads.
Former CEO Britt Greene resigned in 2011 amid pressure from shareholders.
The company has since been on a mission to reinvent itself — relocating offices from Jacksonville to the Panhandle and shedding more than 380,000 acres of “non-strategic timberland” in a $565 million deal with Utah company AgReserves, a valuation of about $1,500 per acre.
St. Joe now owns about 182,000 acres of land, located predominately between Destin and Tallahassee.
Following the sale, then-CEO Park Brady, who announced his retirement last year, said St. Joe was poised to focus on core development activities in the Panhandle, which include the 110,000-acre Bay-Walton Sector Plan, a large-scale development plan now under review by the state.
The Wells Notice issued last week is not a formal allegation against St. Joe, but a courtesy to give the company a chance to respond to any issues raised prior to formal proceedings.
If the SEC moves forward with charges, it could involve a civil injunction, public administrative proceeding or cease-and-desist proceeding, as well as other remedies such as an injunction, cease-and-desist order, disgorgement, pre-judgment interest or civil penalties, according to the document.
