Fannie Mae Files Suit Against KPMG
Fannie Mae announced today that it has filed suit against KPMG LLP, the company's former outside auditor, for negligence and breach of contract in a complaint filed today with the Superior Court of the District of Columbia. Company executives were not available to comment further at press time. Fannie Mae has long been the target of scrutiny from the Office of Federal Housing Enterprise and Oversight (OFHEO) and the U.S. Securities and Exchange Commission (SEC) for accounting and financial misstatements. The company agreed to a comprehensive settlement May 23 with both agencies in which it agreed to pay a $400M penalty and undertake a range of actions including revising accounting practices and limiting its acquisition of mortgage portfolio holdings. On December 6, Fannie Mae announced that it had completed restating its 2004 earnings, and that $6.3 billion in retained earnings were overstated due to accounting errors at the mortgage giant. KMPG served as the lead auditor for the company's 2004 financial statements and annual report to shareholders. For more information, visit http://www.fanniemae.com/.