Probe to cost Freddie Mac $50 million
Mortgage finance company Freddie Mac will pay $50 million to settle federal charges that it fraudulently misstated earnings over a four-year period.
The Securities and Exchange Commission announced the settlement Thursday.
Three former Freddie Mac executives settled SEC charges of negligent conduct by agreeing to pay a total of $265,000 in civil fines and to make restitution totaling $125,548.
“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 Syron, the company’s chairman.
An accounting scandal erupted at the government-sponsored firm in June 2003, when it disclosed that it had misstated earnings by about $5 billion -- mostly underreported -- to smooth quarterly volatility in earnings from 2000 to 2002 and meet Wall Street expectations.
Top company executives were ousted. The events shocked Wall Street, where Freddie Mac -- the nation’s second-largest buyer and guarantor of home mortgages -- had a reputation as a reliable corporate player.
Freddie Mac paid a then-record $125-million civil fine in 2003 in a settlement with the Office of Federal Housing Enterprise Oversight.