SANTA FE FINANCIAL CORPORATION
10940 Wilshire Blvd., Suite 2150
Los Angeles, CA 90024
Telephone: (310) 889-2500
Facsimile: (310) 889-2525
Via EDGAR
October 8, 2009
Robert Telewicz
Senior Staff Accountant
Howard Efron
Staff Accountant
Securities and Exchange Commission
Division of Corporation Finance, Mail Stop 3010
Washington, D.C. 20549
Re: Santa Fe Financial Corporation.
Form 10-KSB for the fiscal year ended June 30, 2008
File No. 0-06877
Dear Mr. Telewicz and Mr. Efron:
This letter is in response to your further comment letter dated October 1, 2009
regarding the Form 10-KSB for the fiscal year ended June 30, 2008 of Santa Fe
Financial Corporation ("Santa Fe" or the "Company"). Our responses below
correspond to each of the comments set forth in your letter. For convenience,
we have set forth the comment or question asked prior to each of our responses.
Form 10-KSB for the fiscal year ended June 30, 2008
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Financial Statements
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Notes to Consolidated Financial Statements
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Note 1 - Significant Accounting Policies
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Minority Interest, page 32
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1. We note your response to our prior comment one in your correspondence
letters dated as of August 24, 2009 and September 25, 2009 and we are unable to
agree with your position. It does not appear that the limited partners have a
contractual obligation to fund the accumulated deficit in Justice Enterprises,
Inc. As such, we continue to believe these losses should be charged to the
majority interest in accordance with paragraph 15 of ARB 51. Please revise your
financial statements accordingly. Additionally, please upload to Edgar copies
of the seven agreements which you provided to the Staff for its consideration
in this matter.
RESPONSE:
While we still consider Evon Corporation (as a general and limited partner) and
the limited partners that are the successors to Justice Enterprises, Inc. to
have a binding obligation to make good on certain losses of the Partnership, we
agree that such obligation is no longer sufficient to fund all of the
accumulated deficit at Justice Investors. As such, we will revise our financial
statements to charge the Partnership losses attributable to both the minority
and majority interests to the majority interest in accordance with paragraph 15
of ARB 51. We will also make appropriate revisions regarding the carrying of a
minority interest asset related to Justice Investors. The Company will file the
required disclosures under Item 4.02(a) of Form 8-K within the specified time
period.
We have filed a Form 12b-25 extending the time for the Company to file its
annual report on Form 10-K for the fiscal year ended June 30, 2009. We intend,
to file that report on or before October 13, 2009. We plan to restate the
financial statements for fiscal year ended June 30, 2008 in the current year
filing with appropriate footnote disclosure regarding any prior period
adjustments. We will also provide appropriate footnote disclosure regarding
revisions to any quarterly financial information. Such restated information and
disclosures will be consistent with the guidance set forth by the Chief
Accountant in the "Sample Letter Sent in Response to Inquiries Related to
Filing Restated Financial Statements for Errors in Accounting for Stock Option
Grants" dated, January 2007. We believe that general guidance is applicable to
our current situation where the Company would be unduly burdened by amending
all previously filed reports and that the filing of numerous amendments could
adversely impact the ability of the reader of our financial statements to
easily and fully understand the impact of the restatement.
PricewaterhouseCoopers LLP ("PWC"), the independent registered public
accounting firm that audited the Company's financial statements for fiscal year
ended June 30, 2007, was discharged in October 2007 and replaced by the
Company's current auditors, Burr Pilger & Mayer LLP ("BPM"). It would create a
severe financial hardship and be unduly burdensome if the Company would have to
re-engage PWC to reissue fiscal year 2007 financial statements. PWC has already
indicated that all of the Company's files are in storage and have expressed
reluctance as to any reengagement. PWC has expressed a position to the Company,
that, all that should be required under existing guidance is a prior period
adjustment and a restatement of the fiscal 2008 financial statements in the
Company's current Form 10-K for the fiscal year ended June 30, 2009.
Such an approach seems to make sense and is consistent with the guidance
referenced above that was issued by Chief Accountant in January 2007. The
Company is a smaller reporting company and only requires two years of audited
financial information in its Form 10-K. For fiscal year ended June 30, 2008,
the Company was considered a small business issuer and reported under the
provisions of Regulation S-B. As a result, no comparative balance sheets were
required for that fiscal year. As any required revisions, and prior period
adjustments, will be presented in the Company's Form 10-K for the fiscal year
ended June 30, 2009, we are respectfully requesting that no separate amendment
of the Company's fiscal 2007 financial statements be required.
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You also suggest that the Company may wish to provide the Staff with marked
copies of the amendment to expedite its review. It is our understanding that
such prior review is a not a requirement of the filing of the Company's Form
10-K for the fiscal year ended June 30, 2009. As time is of the essence, it is
uncertain whether the Company will be in a position to make any formal
submission to the Staff regarding the restatements to be presented in that 10-K
which needs to be filed on or before October 13, 2009. The Company will
continue to work with the Staff on an informal basis during that interim period
regarding any disclosure issues.
With respect to the Staff's request that the Company upload to Edgar copies of
the seven agreements which we previously provided to the Staff for
consideration, we will provide those documents as soon as practicable. Those
agreements date back to the 1960s and 1970s and do not exist in any electronic
format (other than scanned copies). To submit such agreements on Edgar will
require either manual typing of each document or some way to upload scanned
files in PDF format. After we complete the Company's filing of its 10-K Report,
we will consult with outside financial publishers and Edgar filing agents as to
the best way to meet the Staff's request.
In connection with responding to your comments, the Company acknowledges that:
* the Company is responsible for the adequacy and accuracy of the
disclosure in the filings;
* staff comments or changes to disclosure in response to staff comments do
not foreclose the Commission from taking any action with respect to the
filings; and
* the Company may not assert staff comments as a defense in any proceeding
initiated by the Commission or any person under the federal securities
laws of the United States.
If you require further information or have further comments, please feel free
to call me at my direct number at (310) 889-2511 or you can reach me at my
direct facsimile number (310) 496-1606.
Sincerely,
/s/ David T. Nguyen
David T. Nguyen
Treasurer and Controller
Principal Financial Officer
cc: John V. Winfield
Michael G. Zybala
Burr, Pilger & Mayer LLP
Audit Committee
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