Freddie Settles Fraud Charges

Freddie Mac has agreed to pay a $50 million civil money penalty to settle government charges that the giant mortgage company engaged in securities fraud from 1998 to 2002.The Securities and Exchange Commission alleged that the publicly traded government-sponsored enterprise manipulated earnings and engaged in transactions to nullify the effects of a new hedge accounting rule. This resulted in the misrepresentation of the company's financial results and forced Freddie to restate its earnings for 2000, 2001, and 2002. "We take these charges seriously, and that's why the Freddie Mac of today is a very different company from the Freddie Mac of the past," said Freddie Mac chairman and chief executive Richard Syron. As part of the settlement, four former Freddie executives settled charges of negligent conduct without admitting or denying the charges (see item below). Freddie Mac can be found online at http://www.freddiemac.com.