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Developer, former CEO settle U.S. SEC charges over land value


(Reuters) — St. Joe Co. and five individuals, including a former CEO, agreed to settle U.S. regulatory charges the Florida developer and landowner improperly accounted for the falling value of its residential real estate assets after the financial crisis.

The civil settlement announced by the U.S. Securities and Exchange Commission on Tuesday came five years after Greenlight Capital Inc. hedge fund manager David Einhorn accused the WaterSound, Florida-based company of vastly overvaluing its real estate holdings, saying one site resembled a “moonscape” rather than a luxury development.

Mr. Einhorn shorted St. Joe shares at the time of his October 2010 presentation. St. Joe revealed two SEC probes the next year.

The SEC said St. Joe will pay a $2.75 million fine, while former CEO William Britton Greene will pay a $120,000 fine and give up $400,000 of gains plus interest.

A former chief financial officer, William McCalmont, and a former chief accounting officer, Janna Connolly, also agreed to pay fines and give up gains. Two former accounting directors were also sanctioned. None of the defendants admitted wrongdoing.

The SEC said St. Joe materially overstated earnings and assets in 2009 and 2010 because it failed to take required writedowns on properties hit hard by the financial crisis.

After shortfalls were addressed in the fourth quarter of 2011, St. Joe recognized more than $374 million in impairment losses associated with real estate investments, the SEC said.

“Where specialized accounting rules govern, it is essential that those responsible for the company's accounting and financial reporting be familiar with and properly apply them,” SEC enforcement chief Andrew Ceresney said in a statement. “St. Joe and its senior executives failed to do so.”

St. Joe and lawyers for the company, Messrs. Greene, McCalmont and Connolly did not immediately respond to requests for comment.