The St. Joe Company Investor Filed Lawsuit Against Board Of Directors

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Company Name(s): 
St. Joe Company (the)
Case Name: 
St. Joe Company (the) Shareholder Derivative Action 03/29/2011
Case Status: 
Lawsuit Filed
Case Status: 
Case Dismissed
Affected Securities
Lawsuit Overview
Type of Lawsuit: 
Shareholder Derivative Action
Date Filed: 

JANUARY 2012 - Case dismissed.

An investor in shares of the St. Joe Company filed a lawsuit against directors of the St. Joe Company over alleged breaches of fiduciary duty.

According to the complaint the plaintiff alleges that certain of its officers and directors of St. Joe Company breached their fiduciary duties.
The Lawsuit follows a lawsuit filed in the United States District Court for the Northern District of Florida in 2010 by investors who only purchased St. Joe Co stock between February 19, 2008 and October 12, 2010 against St. Joe Company over the alleged Securities Laws violations. According to that complaint filed the plaintiff alleges that St. Joe Company violated Federal Securities Laws by failing to disclose and misrepresenting certain material adverse facts which were known to defendants or recklessly disregarded by them.

Shares of St. Joe Company fell after the Wall Street Journal and other news sources reported in 2010 that Greenlight Capital Inc.’s David Einhorn, who was introduced as the man behind the early, early call that Lehman Brothers was in deep trouble, had given a 139-slide PowerPoint presentation at the Value Investing Congress in New York in which David Einhorn raised a number of challenges for St. Joe Company’s, including that the Company is accounting for untouched land as developed and will probably have to take impairment charges since only minimal write-downs have been taken on its real estate portfolio. Mr. Einhorn's presentation noted that St. Joe's "development plans have fallen flat, leaving it with 'ghost towns' and inevitable writedowns." For example, Mr. Einhorn said he would "generously" place a value of $17.8 million on the remaining residential development at St. Joe's Windmark Beach property while the company is carrying the property at $164.5 million on its balance sheet. Mr. Einhorn also stated that the Company "was 'stuck' after making an aggressive bet on beachfront developments that have gone nowhere, and that it was overvaluing the real estate holdings on its books."
David Einhorn proceeded to go through the various developments, citing St. Joe Company’s progress reports on file with local authorities. Einhorn reportedly mentioned a case of one town, out of 2,600 units planned by 2011, St. Joe Company’s only built 12 dwelling units and added “the local fire department said they wouldn’t build a fire station because there’s nothing going on here.” Einhorn reportedly also named other developments by St. Joe Company, such as a development that is advertised as beachfront, but appears to be no land in the development that’s actually by the beach, or another development that is next-door to a sewage facility. The Wall Street Journal further reported that that the basic thesis of Einhorn’s presentation was that “[St. Joe’s] holdings of Florida real estate are worth nowhere near the $746 million the company says they are worth.”
On this news, so the lawsuit, shares of the St. Joe Company fell $2.38 per share, or 9.7 percent, to close on October 13, 2010 at $22.16 per share, on unusually heavy trading volume. The following day the Company's shares declined an additional $2.42 per share, or 10.9 percent, to close on October 14, 2010 at $19.74 per share, again on heavy trading volume. Cumulatively, over these two days St. Joe's shares declined a total of $4.80 per share, or over 19.5 percent.

St. Joe’s stock recently closed at $18.34 per share.