Human Capital & Careers

Freddie Mac to Help Recover Compensation

Under an agreement with federal regulators, the mortgage company agreed to reclassify two former executives, who were originally deemed to have ''r...
Stephen TaubSeptember 13, 2005

Freddie Mac has agreed to help federal regulators investigate the mortgage company’s two former top executives as part of a settlement stemming from the company’s accounting scandal.

Under a consent agreement, Freddie Mac agreed to provide documents to the Office of Federal Housing Enterprise Oversight (OFHEO) in an effort to recover compensation from former chief executive officer Leland Brendsel and former chief financial officer Vaughn Clarke.

This includes $24.4 million in severance benefits and stock awards received by Brendsel and $750,000 in departure benefits received by Clarke, according to the Associated Press. The OFHEO is seeking additional restitution of $3.8 million from Brendsel and $537,000 from Clarke, the AP added.

The two executives left Freddie Mac in June 2003; later that year the company restated earnings upward by some $5 billion. Federal regulators eventually ordered the mortgage company to pay a $125 million fine for alleged management misconduct and violation of its public trust in connection with its earnings misstatement.

Under the agreement with the OFHEO, Freddie Mac also agreed to reclassify Brendsel and Clarke, who were originally deemed to have “resigned” from the company, as “terminated for cause” so their benefits can be forfeited, the wire service also reported.