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Under the proposed agreement, the mortgage giant agreed to amend its 401(k) plan to appoint an independent fiduciary to oversee the Freddie Mac Stock Fund, one of the investment options under the plan.
Stephen Taub, CFO.com | US
August 21, 2006
Freddie Mac agreed to pay $4.65 million to settle a class-action lawsuit brought under the Employee Retirement Income Security Act. The charges stemmed from the company’s restatement for the years 2000 through 2002.
The mortgage giant had been accused of fraudulently overstating its earnings, thus inflating the value of its shares, according to published reports. Part of the affected stock was held in employee retirement plans.
In anticipation of the proposed settlement, the Department of Labor informed the company that it has closed its investigation of Freddie Mac’s Thrift/401(k) Savings Plan, according to a company press release. The DOL has said that it will mull further action if the settlement isn't finalized, approved, and implemented as it was proposed, Freddie Mac added in its announcement.
Under the proposed settlement, Freddie Mac agreed to amend the Thrift/401(k) Savings Plan to appoint an independent fiduciary to oversee the Freddie Mac Stock Fund, one of the investment options under the plan. The company has also agreed to conduct voluntary seminars to educate employees about investing and the importance of asset diversification.
The company also said it will provide additional education to employee ERISA fiduciaries regarding their obligations under the act.
Freddie Mac agreed to the proposed settlement without any admission of wrongdoing, according to the company release, which noted that that the payment will be fully covered by insurance.