According to a press release dated November 03, 2010, the Complaint charges St. Joe, certain of its officers and directors, its underwriter and auditors with violations of the Securities Act of 1933 and Securities Exchange Act of 1934. St. Joe is one of the largest real estate development companies in Florida and is engaged in town and resort development, commercial and industrial development and rural land sales. More specifically, the Complaint alleges that the Company failed to disclose and misrepresented the following material adverse facts which were known to defendants or recklessly disregarded by them: (1) as the Florida real estate market was in decline, St. Joe was failing to take adequate and required impairments and accounting write-downs on many of its Florida based property developments; (2) as a result, St. Joe's financial statements materially overvalued the Company's Florida based property developments; (3) the Company's financial statements were not prepared in accordance with Generally Accepted Accounting Principles; (4) the Company lacked adequate internal and financial controls; and (5) as a result of the foregoing, the Company's financial statements were materially false and misleading at all relevant times.
On October 13, 2010, St. Joe's investors were shocked as Greenlight Capital's David Einhorn detailed at the Value Investing Congress how St. Joe needed to take "substantial impairments" and accounting writedowns on many of its properties, and that further building by the Company "will drive the stock price to zero." Mr. Einhorn's presentation, entitled "Field of Schemes: If You Build It, They Won't Come," 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."
On this news, shares of the Company's stock 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.
On January 11, 2011, pursuant to the Court's order of Consolidation, this case was consolidated onto docket number 10-cv-452. On January 25, 2011, the Court issued an Order appointing Lead Plaintiff and Lead Counsel.
On January 28, 2011, the Court Ordered, pursuant to Fla. N.D. Loc. 3.1(C), the venue for this case to be transferred from the Pensacola Division to the Panama City Division. All future pleadings and communications for the consolidated cases shall refer to Panama City Division and Case No. 5:11-CV-27. On February 24, 2011, a Consolidated Amended Class Action Complaint was filed.
The defendants filed a motion to dismiss for failure to state a claim on April 6, 2011. On August 24, 2011, Judge Richard Smoak signed the Order granting the motion to dismiss without prejudice. Plaintiff shall have twenty days, until 9/14/2011, in which to serve an Amended Consolidated Complaint. Failure to file an amended complaint shall result in dismissal with prejudice and the case being closed.
On January 12, 2012, the Court issued an Order granting the motion to dismiss with prejudice and dismissing the case.
On March 15, 2012, notice was filed with the Court that plaintiffs appealed to the United States Court of Appeals for the Eleventh Circuit from the Judgment entered in favor of the defendants on January 12, 2012. On February 25, 2013, the Court of Appeals issued their ruling affirming the decision of the District Court.