St. Joe Company and four former executives agreed to pay $3.7 million to settle charges of improper accounting for residential projects in the late 2000s.
The Securities and Exchange Commission said in an administrative order that St. Joe, based in Watersound, Florida, was guilty of material overstatements of assets and earnings in 2009 and 2010.
The SEC determined that the overstatements arose from St. Joe’s impairment tests of real estate assets, which deviated from generally accepted accounting principles (GAAP).
The former CEO, former CFO and former chief accounting officer allegedly used an unjustifiably high property valuation in conducting an impairment test for a major St. Joe development, called Windmark Beach II in St. Joe, Florida.
In its settlement with the SEC, St. Joe agreed to pay a $2.75 million civil penalty and former company executives agreed to collectively pay another $975,000 in penalties.
The SEC charged that St. Joe failed to include all necessary costs in its impairment testing. If the company had included such cost, St. Joe would have been required to write down the value of is three largest real estate developments.
Publicly traded St. Joe, listed on the New York Stock Exchange under ticker symbol JOE, earned net income of $406 million on revenue of $701 million in its 2014 fiscal year. [CFO Magazine] — Mike Seemuth