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Freddie Mac Wins Dismissal of Federal Putative Class Action Lawsuit

A putative class action securities lawsuit filed against ""Freddie Mac"":http://www.freddiemac.com in federal court in August 2008 has been dismissed, according to a statement from the McLean, Virginia-based GSE last week.

Judge John Keenan of the U.S. District Court for the Southern District of New York granted Freddie Mac's motion to dismiss all claims asserted against the mortgage financier in a putative securities fraud class action.


Judge Keenan found not actionable all alleged misstatements and omissions regarding Freddie Mac's involvement in the subprime and Alt-A mortgage markets. He stated that plaintiffs failed adequately to plead that Freddie Mac's disclosures on those issues were either false or misleading.

The judge also dismissed alleged misrepresentation claims relating to Freddie Mac's capital adequacy, core capital, internal controls, and underwriting processes. Plaintiffs were given 60 days to file an amended complaint.

The plaintiffs in the suit were two pension funds -- Central States, Southeast and Southwest Areas Pension Fund and National Elevator Industry Pension Plan.

They sued Freddie Mac, along with three former executives for allegedly misleading shareholders about the GSE's exposure to risky mortgage loans prior to the government's seizure of the firm.

Two of the three execs -- former CEO Richard Syron and former CFO Anthony ""Buddy"" Piszel â€" have disclosed in recent months that they have been notified by the Securities and Exchange Commission that civil charges may soon be filed against them.

About Author: Heather Cernoch


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