Print this article | Return to Article | Return to CFO.com
Shareholders sued after the mortgage-finance company's board found that executives had smoothed earnings through improper accounting, leading to a restatement.
Stephen Taub, CFO.com | US
April 21, 2006
Freddie Mac has agreed to pay $410 million and institute governance reforms to settle securities class-action and shareholder-derivative lawsuits stemming from its massive restatement, which covered 2000 through 2002.
In a statement, the mortgage-finance company stressed that the settlement does not include an admission of wrongdoing.
According to The Washington Post, the settlement also includes several former and current board members, as well as several top executives who were fired due to the accounting scandal, including former chief financial officer Vaughn Clarke.
"Today's settlement enables this management team to resolve past issues so that we can focus squarely on meeting our important housing mission, running the business well and serving the needs of our customers," said chairman and chief executive officer Richard Syron in a statement.
The case was initiated by the Ohio Public Employee Retirement System and Ohio's State Teachers Retirement System in 2003. Shareholders sued, according to Bloomberg, after Freddie Mac directors determined that executives had smoothed earnings through improper accounting, leading to a restatement.
"This is a significant recovery and a very positive outcome for the buyers of Freddie Mac stock during the class period, including two retirement systems in Ohio," said state attorney general Jim Petro in a statement. "We have sent an important message to companies who receive money from investors: We will protect our citizens' savings with tenacity."