Freddie Mac Settles SEC Fraud Charges, Will Pay $50 Million
Freddie Mac said late yesterday that it has agreed to a $50 million civil penalty to settle SEC charges of securities fraud in connection with improper earnings management at the GSE beginning as early as 1998 and lasting into 2002. As part of the settlement agreement, Freddie Mac neither admitted nor denied any wrongdoing. The SEC's complaint alleges that Freddie Mac engaged in a fraudulent scheme that deceived investors about its true performance, profitability, and growth trends. According to the complaint, Freddie Mac misreported its net income in 2000, 2001 and 2002 by 30.5 percent, 23.9 percent and 42.9 percent, respectively. "We take these charges seriously, and that's why the Freddie Mac of today is a very different company than the Freddie Mac of the past," said Richard F. Syron, Freddie Mac's chairman and chief executive officer. "Today's agreement would resolve the last investigation related to the company's legacy restatement issues. This is another milestone enabling us to focus entirely on those things that are most important â€“ further advancing our housing mission, effectively serving our customers and building our business for the future."