News coverage of the Florida land company St. Joe and fund manager David Einhorn's short of it has been the subject of earlier coverage on this site here, here, here, and here. So it's worth noting just to tie up the loose end that the SEC announced earlier this week a $2.75 million civil penalty on the company. The SEC faulted the company for "improperly accounting for the declining value of its residential real estate developments during the financial crisis. As a result of this misconduct, St. Joe reported materially overstated earnings and assets in 2009 and 2010."
I'm not sure I see the wisdom in punishing St. Joe shareholders further by making them pay a fine to the government. If the shareholder bought in after or during the overstated earnings, the shareholder can make the case that he was a victim of the improper accounting because he bought in at an improperly inflated price. Making the shareholder pay a fine via the company just adds insult to injury. Maybe I am missing something.
The larger picture is that JOE is trading in the $19 to $20 a share range, well above the $7 a share that Mr. Einhorn announced he thought it was worth back in 2010. The SEC announcement says its investigation "is continuing," so it's certainly possible that the agency will manage to destroy additional shareholder value. The company describes the investigation as "fully resolved."
