Freddie Mac Settles SEC Fraud Charges, Agrees to Pay $50 Million Fine

By Aaron Poehler

Published on September 28, 2007

The SEC charged McLean, Virginia-based Freddie Mac with securities fraud following an investigation related to the restatement of financial results. SEC officials alleged that the corporation deceived investors about its profitability and performance during a period lasting from 1998 to 2002, misreporting its net income by as much as 42 percent. Under the terms of the agreement, the corporation neither admitted nor denied wrongdoing, though it agreed to refrain from future violations of securities laws. The $50 million penalty is expected to be distributed among injured investors.

Additionally, four former Freddie Mac executives charged with negligent conduct agreed to settle without admitting or denying the charges. Vaughn Clarke, Robert Dean, Nazir Dossani, and David Glenn will pay a total of $515,000 in civil fines and make restitution totaling $275,548.

The proposed settlement is still subject to final approval by the court.

In 2006 Freddie Mac settled a $410 million shareholder lawsuit over accounting misstatements; in 2003 the corporation paid a then-record $125 million civil fine to settle charges brought by the Office of Federal Housing Enterprise Oversight.

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