Tuesday, May 23, 2006

Fannie Mae - Settlement Near?

As reported today here (NY Times) and here (Washington Post), mortgage giant Fannie Mae has agreed to pay $400 million in civil penalties under an agreement with the Securities and Exchange Commission and the Office of Federal Housing Enterprise Oversight, to settle charges related to its $10.8 billion accounting scandal.

The SEC's litigation release announcing the settlement can be found here and the Commission's complaint can be found here.

The SEC had charged Fannie Mae with violations of Sections 10(b), 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Securities Exchange Act of 1934 and Rules 10b-5, 12b-20, 13a-1, 13a-11, and 13a-13 thereunder; and violations of Sections 17(a)(2) and (3) of the Securities Act of 1933.

OFHEO's announcement can be found here, OFHEO's Report of the Special Examination of Fannie Mae can be found here, and a summary of the report can be found here.

Though these settlements do nothing to settle the consolidated ERISA, securities and derivative litigation pending against Fannie Mae, readers may recall that Freddie Mac announced a settlement with federal regulators just prior to announcing a settlement of the private derivative and securities class actions.

Disclosure: The author and his law firm are counsel for certain plaintiffs in the currently pending Fannie Mae derivative litigation.

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