Mail Stop 4561
March 9, 2006
Mr. John V. Winfield
President and Chief Executive Officer
Santa Fe Financial Corporation
820 Moraga Drive
Los Angeles, CA 90049
Re: Santa Fe Financial Corporation
Form 10-KSB for Fiscal Year Ended June 30, 2005
Filed October 18, 2005
Form 10-QSB for Fiscal Quarter Ended September 30, 2005
Filed November 10, 2005
File No. 0-06877
Dear Mr. Winfield:
We have reviewed your response letter dated March 6, 2006
and
have the following additional comments. As previously stated,
these
comments require amendment to the referenced filings previously
filed
with the Commission. In some of our comments, we ask you to
provide
us with information so we may better understand your disclosure.
After reviewing this information, we may raise additional
comments.
General
1. The Division of Investment Management has reviewed the Forms
10-
KSB for the fiscal year ended June 30, 2005, and the Forms 10-QSB
for
the quarterly period ended September 30, 2005, filed by Portsmouth
Square, Inc. ("Portsmouth") and by Santa Fe Financial Corporation
("Santa Fe").[1] The information reported in these filings
suggests
that Portsmouth and Santa Fe each may be within the definition of
"investment company" in the Investment Company Act of 1940 (the
"Investment Company Act").
Section 3(a)(1) of the Investment Company Act defines an
"investment company," in relevant part, as any issuer that:
(A) is or holds itself out as being engaged primarily, or proposes
to
engage primarily, in the business of investing, reinvesting, or
trading in securities; . . . or
(C) is engaged or proposes to engage in the business of investing,
reinvesting, owning, holding, or trading in securities, and owns
or
proposes to acquire investment securities[2] having a value
exceeding 40 per centum of the value of such issuer`s total assets
(exclusive of Government securities and cash items) on an
unconsolidated basis. [Endnote and emphasis added.]
Please provide us with a detailed written legal analysis of
whether Portsmouth or Santa Fe is an "investment company" as
defined
in the Investment Company Act. In this analysis, please
specifically
discuss Portsmouth`s and Santa Fe`s status under Sections
3(a)(1)(A)
and 3(a)(1)(C).
If you conclude that the Portsmouth or Santa Fe would be an
investment company under either provision, you may wish to
consider
whether any provision of the Investment Company Act, or rules
enacted
thereunder, would provide Portsmouth or Santa Fe with an exclusion
or
an exemption from the definition.3 If you conclude that either
Portsmouth or Santa Fe may rely on an exclusion or exemption from
the
definition of investment company, please provide a written
explanation of the basis for your conclusion.
If you determine that no exclusion or exemption applies to
Portsmouth and/or to Santa Fe, please explain what steps you
intend
to take, either to cause the Portsmouth and/or Santa Fe to fall
outside the definition of investment company, or to register as an
investment company.
_________________________________
1 According to these filings, Portsmouth is a 68%-owned
subsidiary
of Santa Fe.
2 Section 3(a)(2) of the Investment Company Act defines
"investment securities" to include:
all securities except (A) Government securities, (B) securities
issued by employees` securities companies, and (C) securities
issued
by majority-owned subsidiaries of the owner which (i) are not
investment companies, and (ii) are not relying on the exception
from
the definition of investment company in [Sections 3(c)(1) or
3(c)(7)].
3 See, e.g., Rules 3a-1 and 3a-2 under the Investment
Company Act.
Form 10-KSB for the Fiscal Year Ended June 30, 2005
Item 8A. Controls and Procedures, page 40
2. We have reviewed your response to prior comment 1. Please file
an
amended Form 10-KSB that incorporates your proposed revisions.
Item 13. Exhibits and Reports on Form 8-K, page 49
3. We have reviewed your response to prior comment 2. Please file
an
amended Form 10-KSB with revised certifications, consistent with
your
response.
As appropriate, please amend your filings and respond to
these
comments within 10 business days or tell us when you will provide
us
with a response. You may wish to provide us with marked copies of
the amendment to expedite our review. Please furnish a cover
letter
with your amendment that keys your responses to our comments and
provides any requested information. Detailed cover letters
greatly
facilitate our review. Please file your cover letter on EDGAR.
Please understand that we may have additional comments after
reviewing your amendment and responses to our comments.
In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging 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.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filings or
in
response to our comments on your filings.
You may contact Amanda Sledge, Staff Accountant, at (202)
551-
3473 or the undersigned at (202) 551-3403 if you have questions.
With regard to comment 1, please direct your response, and any
questions regarding the Investment Company Act, to Wendy
Friedlander,
Senior Counsel, Division of Investment Management, Office of Chief
Counsel, (202) 551-0682, friedlanderw@sec.gov.
Sincerely,
Steven Jacobs
Accounting Branch Chief
Mr. John V. Winfield
Santa Fe Financial Corporation
March 9, 2006
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