Form N-CEN FAIRHOLME FUNDS INC For: Nov 30

February 7, 2020 9:17 AM EST

Get inside Wall Street with StreetInsider Premium. Claim your 1-week free trial here.


  X0201
  
    N-CEN
    
      LIVE
      
        
          0001096344
          XXXXXXXX
        
      
      
        false
        false
        false
      
      N-1A
    
    
      
        true
      
    
  
  
    
    
      Fairholme Funds Inc
      811-09607
      0001096344
      549300HWYY7ECL9DW492
      2601 NE 2ND AVENUE
      Miami
      33137
      US-FL
      US
      866-202-2263
      
        
      
      
        
          The Bank of New York Mellon
          240 Greenwich Street
          New York
          
          10286
          212-495-1784
          Records related to its function as custodian
        
        
          The Bank of New York Mellon
          760 Moore Road
          King of Prussia
          
          19406
          800-441-9800
          Records related to its function as administrator and accounting agent
        
        
          BNY Mellon Investment Servicing (US) Inc.
          760 Moore Road
          King of Prussia
          
          19406
          508-871-8500
          Records related to its function as transfer agent
        
        
          Fairholme Capital Management, L.L.C.
          2601 NE 2nd Avenue
          Miami
          
          33137
          305-358-3000
          Records related to its function as investment adviser
        
        
          Fairholme Distributors, LLC
          899 Cassatt Road
          400 Berwyn Park, Suite 110
          Berwyn
          
          19312
          866-251-6920
          Records related to its function as distributor
        
      
      N
      N
      N
      N-1A
      3
      Y
      
        
          Bruce R. Berkowitz
          001190686
          Y
          
            
          
        
        
          Cesar L. Alvarez, Esq
          N/A
          Y
          
            
          
        
        
          Howard S. Frank
          N/A
          Y
          
            
          
        
        
          Terry L. Baxter
          N/A
          N
          
            
          
        
        
          Steven J. Gilbert
          N/A
          N
          
            
          
        
        
          Avivith Oppenheim, Esq.
          N/A
          N
          
            
          
        
        
          Leigh Walters, Esq.
          N/A
          N
          
            
          
        
      
      
        
          Erica K. Kapahi
          007224923
          2601 NE 2nd Avenue
          Miami
          
          33137
          XXXXXX
          Y
          
            
          
        
      
      N
      
      N
      N
      
      N
      N
      
        
          Fairholme Distributors, LLC
          008-68327
          000150987
          N/A
          
          N
        
      
      N
      
        
          Deloitte & Touche LLP
          34
          549300FJV7IV1ZHGAV28
          
        
      
      N
      N
      N
      N
      N
      N
      N
    
    
      
        The Fairholme Fund
        S000008484
        549300OIJNQWMW22MR11
        N
        1
        0
        0
        
          
        
        N/A
        Y
        N
        Y
        N
        N/A
        0.000000000000
        0.000000000000
        N/A
        Y
        Y
        N
        N
        
          
            Fairholme Capital Management, LLC
            801-54831
            000107987
            549300G5D9VO4WQOOQ96
            
            N
          
        
        
          
            BNY Mellon Investment Servicing (US) Inc.
            084-01761
            549300CFZQLI9QMJ1Z03
            
            N
            N
          
        
        N
        
          
            Refinitiv US Holdings Inc.
            549300NF240HXJO7N016
            
            N
          
          
            PricingDirect, Inc.
            549300WIC0TOJ7N7GD54
            
            N
          
          
            Bloomberg Finance L.P.
            5493001KJTIIGC8Y1R12
            
            N
          
          
            ICE Data Pricing & Reference Data, LLC
            5493000NQ9LYLDBCTL34
            
            N
          
        
        N
        
          
            The Bank of New York Mellon
            HPFHU0OQ28E4N0NFVK49
            
            N
            N
            Bank - section 17(f)(1) (15 U.S.C. 80a-17(f)(1))
          
        
        N
        
          
            BNY Mellon Investment Servicing (US) Inc.
            549300CFZQLI9QMJ1Z03
            
            N
            N
          
          
            Charles Schwab & Co., Inc.
            549300ZP8XN77GK5BS04
            
            N
            N
          
          
            TD Ameritrade, Inc.
            CWQYQU0TV2NLMLZKNB44
            
            N
            N
          
          
            National Financial Services, LLC
            549300JRHF1MHHWUAW04
            
            N
            N
          
        
        N
        
          
            The Bank of New York Mellon
            HPFHU0OQ28E4N0NFVK49
            
            N
            N
          
        
        N
        
          
            Watermill Institutional Trading LLC
            008-68311
            000150892
            549300RU7K4VMGDJ0G97
            
            7657.000000000000
          
          
            U.S. BANCORP INVESTMENTS, INC.
            008-35359
            000017868
            H85Z6XZP8B10ES0M2G89
            
            1488.000000000000
          
          
            WEEDEN & CO. L.P.
            008-37267
            000016835
            549300OYBLKSN8M8EW67
            
            5760.000000000000
          
        
        14905.000000000000
        
          
            BOFA SECURITIES, INC.
            008-69787
            000283942
            549300HN4UKV1E2R3U73
            
            1321731210.000000000000
          
          
            BNY MELLON CAPITAL MARKETS, LLC
            008-35255
            000017454
            VJW2DOOHGDT6PR0ZRO63
            
            273225821.000000000000
          
          
            IMPERIAL METALS CORPORATION
            N/A
            N/A
            549300WQSPLDYCC4Z755
            CA
            143222980.000000000000
          
          
            Credit Suisse Securities (USA) LLC
            008-00422
            000000816
            1V8Y6QCX6YMJ2OELII46
            
            142958992.000000000000
          
          
            SunTrust Robinson Humphrey, Inc.
            008-17212
            000006271
            CSVTK36R0PNGXEM7NS14
            
            1165036562.000000000000
          
          
            J.P. Morgan Securities LLC
            008-35008
            000000079
            ZBUT11V806EZRVTWT807
            
            797396111.000000000000
          
          
            WELLS FARGO SECURITIES, LLC
            008-65876
            000126292
            VYVVCKR63DVZZN70PB21
            
            1201735895.000000000000
          
          
            RBC CAPITAL MARKETS LLC
            008-45411
            000031194
            549300LCO2FLSSVFFR64
            
            631125492.000000000000
          
          
            GOLDMAN SACHS & CO. LLC
            008-00129
            000000361
            FOR8UP27PHTHYVLBNG30
            
            362065601.000000000000
          
          
            CitiGroup Global Markets Inc.
            008-08177
            000007059
            MBNUM2BPBDO7JBLYG310
            
            723002910.000000000000
          
        
        6924674624.000000000000
        N
        1091446579.000000000000
        0.000000000000
        N
        N
        N
        N
      
      
        The Fairholme Allocation Fund
        S000031006
        549300EQLL75NJCPTZ45
        N
        1
        0
        0
        
          
        
        N/A
        Y
        N
        Y
        N
        N/A
        0.000000000000
        0.000000000000
        N/A
        Y
        Y
        N
        N
        
          
            Fairholme Capital Management, LLC
            801-54831
            000107987
            549300G5D9VO4WQOOQ96
            
            N
          
        
        
          
            BNY Mellon Investment Servicing (US) Inc.
            084-01761
            549300CFZQLI9QMJ1Z03
            
            N
            N
          
        
        N
        
          
            Refinitiv US Holdings Inc.
            549300NF240HXJO7N016
            
            N
          
          
            PricingDirect, Inc.
            549300WIC0TOJ7N7GD54
            
            N
          
          
            Bloomberg Finance L.P.
            5493001KJTIIGC8Y1R12
            
            N
          
          
            ICE Data Pricing & Reference Data, LLC
            5493000NQ9LYLDBCTL34
            
            N
          
        
        N
        
          
            The Bank of New York Mellon
            HPFHU0OQ28E4N0NFVK49
            
            N
            N
            Bank - section 17(f)(1) (15 U.S.C. 80a-17(f)(1))
          
        
        N
        
          
            BNY Mellon Investment Servicing (US) Inc.
            549300CFZQLI9QMJ1Z03
            
            N
            N
          
          
            National Financial Services, LLC
            549300JRHF1MHHWUAW04
            
            N
            N
          
        
        N
        
          
            The Bank of New York Mellon
            HPFHU0OQ28E4N0NFVK49
            
            N
            N
          
        
        N
        
          
            VIRTU ITG LLC
            008-44218
            000029299
            549300S41SMIODVIT266
            
            3.000000000000
          
          
            Watermill Institutional Trading LLC
            008-68311
            000150892
            549300RU7K4VMGDJ0G97
            
            6566.000000000000
          
          
            U.S. BANCORP INVESTMENTS, INC.
            008-35359
            000017868
            H85Z6XZP8B10ES0M2G89
            
            69.000000000000
          
          
            WEEDEN & CO. L.P.
            008-37267
            000016835
            549300OYBLKSN8M8EW67
            
            482.000000000000
          
        
        7120.000000000000
        
          
            BOFA SECURITIES, INC.
            008-69787
            000283942
            549300HN4UKV1E2R3U73
            
            198398985.000000000000
          
          
            BNY MELLON CAPITAL MARKETS, LLC
            008-35255
            000017454
            VJW2DOOHGDT6PR0ZRO63
            
            19483779.000000000000
          
          
            Credit Suisse Securities (USA) LLC
            008-00422
            000000816
            1V8Y6QCX6YMJ2OELII46
            
            20079682.000000000000
          
          
            SunTrust Robinson Humphrey, Inc.
            008-17212
            000006271
            CSVTK36R0PNGXEM7NS14
            
            136556273.000000000000
          
          
            J.P. Morgan Securities LLC
            008-35008
            000000079
            ZBUT11V806EZRVTWT807
            
            99269862.000000000000
          
          
            WELLS FARGO SECURITIES, LLC
            008-65876
            000126292
            VYVVCKR63DVZZN70PB21
            
            165234049.000000000000
          
          
            RBC CAPITAL MARKETS LLC
            008-45411
            000031194
            549300LCO2FLSSVFFR64
            
            57094408.000000000000
          
          
            JEFFERIES LLC
            008-15074
            000002347
            58PU97L1C0WSRCWADL48
            
            21165352.000000000000
          
          
            GOLDMAN SACHS & CO. LLC
            008-00129
            000000361
            FOR8UP27PHTHYVLBNG30
            
            40449464.000000000000
          
          
            CitiGroup Global Markets Inc.
            008-08177
            000007059
            MBNUM2BPBDO7JBLYG310
            
            59448936.000000000000
          
        
        832664143.000000000000
        N
        71180315.000000000000
        0.000000000000
        N
        N
        N
        N
      
      
        The Fairholme Focused Income Fund
        S000027309
        549300210MAIY8V53061
        N
        1
        0
        0
        
          
        
        N/A
        Y
        N
        Y
        N
        N/A
        0.000000000000
        0.000000000000
        N/A
        Y
        Y
        N
        N
        
          
            Fairholme Capital Management, LLC
            801-54831
            000107987
            549300G5D9VO4WQOOQ96
            
            N
          
        
        
          
            BNY Mellon Investment Servicing (US) Inc.
            084-01761
            549300CFZQLI9QMJ1Z03
            
            N
            N
          
        
        N
        
          
            Refinitiv US Holdings Inc.
            549300NF240HXJO7N016
            
            N
          
          
            PricingDirect, Inc.
            549300WIC0TOJ7N7GD54
            
            N
          
          
            Bloomberg Finance L.P.
            5493001KJTIIGC8Y1R12
            
            N
          
          
            ICE Data Pricing & Reference Data, LLC
            5493000NQ9LYLDBCTL34
            
            N
          
        
        N
        
          
            The Bank of New York Mellon
            HPFHU0OQ28E4N0NFVK49
            
            N
            N
            Bank - section 17(f)(1) (15 U.S.C. 80a-17(f)(1))
          
        
        N
        
          
            BNY Mellon Investment Servicing (US) Inc.
            549300CFZQLI9QMJ1Z03
            
            N
            N
          
          
            TD Ameritrade, Inc.
            CWQYQU0TV2NLMLZKNB44
            
            N
            N
          
          
            National Financial Services, LLC
            549300JRHF1MHHWUAW04
            
            N
            N
          
        
        N
        
          
            The Bank of New York Mellon
            HPFHU0OQ28E4N0NFVK49
            
            N
            N
          
        
        N
        
          
            Watermill Institutional Trading LLC
            008-68311
            000150892
            549300RU7K4VMGDJ0G97
            
            11658.000000000000
          
          
            U.S. BANCORP INVESTMENTS, INC.
            008-35359
            000017868
            H85Z6XZP8B10ES0M2G89
            
            300.000000000000
          
          
            WEEDEN & CO. L.P.
            008-37267
            000016835
            549300OYBLKSN8M8EW67
            
            300.000000000000
          
        
        12258.000000000000
        
          
            BOFA SECURITIES, INC.
            008-69787
            000283942
            549300HN4UKV1E2R3U73
            
            666096535.000000000000
          
          
            BNY MELLON CAPITAL MARKETS, LLC
            008-35255
            000017454
            VJW2DOOHGDT6PR0ZRO63
            
            47462799.000000000000
          
          
            Credit Suisse Securities (USA) LLC
            008-00422
            000000816
            1V8Y6QCX6YMJ2OELII46
            
            55032456.000000000000
          
          
            SunTrust Robinson Humphrey, Inc.
            008-17212
            000006271
            CSVTK36R0PNGXEM7NS14
            
            408504049.000000000000
          
          
            J.P. Morgan Securities LLC
            008-35008
            000000079
            ZBUT11V806EZRVTWT807
            
            279144572.000000000000
          
          
            WELLS FARGO SECURITIES, LLC
            008-65876
            000126292
            VYVVCKR63DVZZN70PB21
            
            499637124.000000000000
          
          
            RBC CAPITAL MARKETS LLC
            008-45411
            000031194
            549300LCO2FLSSVFFR64
            
            228466242.000000000000
          
          
            JEFFERIES LLC
            008-15074
            000002347
            58PU97L1C0WSRCWADL48
            
            32224447.000000000000
          
          
            GOLDMAN SACHS & CO. LLC
            008-00129
            000000361
            FOR8UP27PHTHYVLBNG30
            
            116750677.000000000000
          
          
            CitiGroup Global Markets Inc.
            008-08177
            000007059
            MBNUM2BPBDO7JBLYG310
            
            199368692.000000000000
          
        
        2599594747.000000000000
        N
        186917591.000000000000
        0.000000000000
        N
        N
        N
        N
      
    
    
    
      true
      true
    
    
  



   

Deloitte & Touche LLP

200 Berkeley Street

    Boston, MA 02116
   

Tel:    +1 617 437 2000

www.deloitte.com

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of Fairholme Funds, Inc.:

In planning and performing our audits of the financial statements of Fairholme Funds, Inc., including The Fairholme Fund, The Fairholme Focused Income Fund and The Fairholme Allocation Fund (the “Funds”), as of and for the year ended November 30, 2019, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), we considered the Funds’ internal control over financial reporting, including controls over safeguarding securities, as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements and to comply with the requirements of Form N-CEN, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion.

The management of the Funds is responsible for establishing and maintaining effective internal control over financial reporting. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of controls. A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of a company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

A deficiency in internal control over financial reporting exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

Our consideration of the Funds’ internal control over financial reporting was for the limited purpose described in the first paragraph and would not necessarily disclose all deficiencies in internal control that might be material weaknesses under standards established by the PCAOB. However, we noted no deficiencies in the Funds’ internal control over financial reporting and its operation, including controls for safeguarding securities, that we consider to be a material weakness, as defined above, as of November 30, 2019. This report is intended solely for the information and use of management and the Board of Directors of the Funds and the Securities and Exchange Commission and is not intended to be and should not be used by anyone other than these specified parties.

/s/ Deloitte & Touche LLP

January 29, 2020

Item G.1.a.i. Legal Proceedings

On April 17, 2019, Sears Holdings Corporation, Sears Roebuck and Co., Sears Development Co., Kmart Corporation and Kmart of Washington LLC commenced an adversary proceeding in the United States Bankruptcy Court for the Southern District of New York against Edward Scott “Eddie” Lampert; ESL Investments, Inc.; RBS Partners LP; CRK Partners LLC; SPE Master I L.P.; ESL Partners L.P.; SPE I Partners L.P.; RBS Investment Management LLC; ESL Institutional Partners L.P.; ESL Investors, L.L.C.; JPP LLC; JPP II LLC; Fairholme Capital Management, L.L.C.; Cesar L. Alvarez; Bruce Berkowitz; Alesia Haas; Kunal Kamlani; Steven Mnuchin; Thomas J. Tisch; Seritage Growth Properties, Inc.; Seritage Growth Properties, L.P.; Seritage KMT Mezzanine Finance LLC; Seritage SRC Mezzanine Finance LLC; Seritage KMT Finance LLC; Seritage SRC Finance LLC; Seritage GS Holdings LLC; Seritage SPS Holdings LLC; and Seritage MS Holdings LLC. On November 25, 2019, the plaintiffs filed the First Amended Complaint relating to the adversary proceeding captioned Sears Holdings Corporation, et al. v. Edward Scott Lampert, et al., Case No. 19-08250, in the United States Bankruptcy Court for the Southern District of New York, adding the Registrant and other parties not affiliated with Fairholme Capital Management, L.L.C. (the “Manager”) or the Registrant as additional defendants and asserting new causes of action against the defendants.

Plaintiffs assert avoidance and other claims against certain defendants, including the Manager, for participation in two Sears corporate transactions: (i) the Lands’ End spinoff; and (ii) the Seritage rights offering. The avoidance claims against the Manager include claims for the avoidance of consideration received by The Fairholme Fund and The Allocation Fund from Sears Holdings Corp. in connection with the Lands’ End spinoff and Seritage rights offering that were allegedly actual and/or constructive fraudulent transfers. In the amended complaint, plaintiffs also assert avoidance and other claims seeking to recover amounts allegedly received by the Registrant from alleged related-party transactions with Sears and seek to avoid the release received by certain of the defendants, including the Manager and the Registrant, in connection with the Seritage derivative action. Plaintiffs also assert claims for breach of fiduciary duty and aiding and abetting breach of fiduciary duty arising out of certain related-party transactions against certain Defendants, including the Manager and Bruce Berkowitz, and seek to subordinate the bankruptcy claims of the Registrant, the Manager and Bruce Berkowitz.

Although the Manager and the Registrant believe that they have strong defenses to the foregoing complaint and intend to defend themselves vigorously against the allegations in the complaint, neither the Manager nor the Registrant is in a position to express an opinion about the ultimate outcome of the litigation or the range of potential loss, if any.



Serious News for Serious Traders! Try StreetInsider.com Premium Free!

You May Also Be Interested In





Related Categories

SEC Filings

Related Entities

Fairholme Capital Management