Freddie Mac announced the dismissal of a class action alleging securities fraud.
The lawsuit was filed against the company in federal court in August 2008.
Judge John Keenan of the U.S. District Court for the Southern District of New York ruled that Freddie disclosures on the securities, sold in 2007 and 2008, were not false or misleading.
Judge Keenan also denied plaintiff motion to file a Third Amended Complaint. The plaintiffs were primarily the National Elevator Industry Pension Plan, and others.
“Freddie Mac’s broad disclosure of all of its loan characteristics was an accurate way to relay information to investors, given the confusion surrounding the term ‘subprime,’” which “made it possible for a reasonable investor to, with little effort, take his own measure of risk in Freddie Mac’s loan portfolio,” said Keenan in his ruling.
It’s the second victory for Freddie Mac in as many days.
An FHFA Inspector General investigation into the use of inverse floaters by the government-sponsored enterprise uncovered no evidence that Freddie Mac obstructed homeowners’ abilities to refinance their mortgages.
