Federal Home Loan Mortgage Corporation (Freddie Mac) - Securities Class Action

Company and Case Information

IMPORTANT INFORMATION | INDEX OF FILINGS | SEARCH

Home

Index of Filings

News and Press Releases

Filings

Litigation Activity Indices

Annual/Quarterly Updates

Clearinghouse Research

Articles & Papers

Search

Related Sites

About Us

Local Rules

Sponsors

Register

_______________
Copyright (c) 2001
Stanford Law School

Federal Home Loan Mortgage Corporation (Freddie Mac) Conclusion: According to a press release dated on July 15, 2008, the U.S. District Court for the Southern District of New York ordered an initial distribution of the $410,000,000 settlement in the matter, "Ohio Public Employees Retirement System and State Teachers Retirement System Of Ohio, et al. v. Freddie Mac f.k.a. Federal Home Loan Mortgage Corporation, Leland C. Brendsel, Vaughn A. Clarke, David W. Glenn, and Gregory J. Parseghian, MDL-1584, Lead Case No. 03-CV-4261 (JES)."

A settlement fairness hearing was held on October 26, 2006 at 3:30 p.m. before the Honorable John E. Sprizzo, at the United States District Court for the Southern District of New York, 500 Pearl Street, Courtroom 21C, New York, New York, 10007, at which time final approval of the settlement was granted.

According to a press release dated April 20, 2006, Freddie Mac announced that it has reached an agreement in principle to settle the securities class action and shareholder derivative lawsuits that were filed following the company's restatement of financial results for the years 2000 through 2002. The proposed settlement of these actions includes a cash payment by Freddie Mac of $410 million. The settlement is also based on corporate governance reforms instituted by the company under its current management. The settlement does not include any admission of wrongdoing by the company. The class action cases, entitled Ohio Public Employees Retirement System, et al. v. Freddie Mac, et al., against the company and certain former executive officers, and the shareholder derivative lawsuits, entitled Maureen Henry, et. al. v. Brendsel, et al., and Esther Sadowsky Testamentary Trust v. Brendsel, et al., on behalf of the company against certain former executive officers and current and former members of the company's Board of Directors, have been consolidated and are pending in the U.S. District Court for the Southern District of New York. The proposed settlement is subject to a number of conditions, including approval by the Retirement Boards of Ohio Public Employees Retirement System (which we are informed has occurred) and State Teachers Retirement System of Ohio; negotiation and execution of final documentation; and preliminary and final court approval.

Several purported shareholder class action lawsuits have been filed against Federal Home Loan Mortgage Corporation (Freddie Mac) and certain of its present and former executive officers. In June of 2003, twelve complaints were filed in the US Federal courts for the Southern District of New York (SDNY) and the Eastern District of Virginia. The 'First Identified Complaint' was filed in the Southern District of New York. On August 08, 2003 a complaint was filed in the U.S. District Court for the Southern District of Ohio. Following the filing in Ohio, the three district courts instituted a Multi District Litigation (MDL) panel to manage the cases.

The cases were consolidated in each court and transferred to the Eastern District of Virginia for further proceedings first. Subsequently, on November 6, 2003, the Southern District of New York court entered an order in which the 'motion for transfer to the Eastern District of Virginia, under 28 U.S.C. 1407 is deemed moot.'

Following numerous proceedings, the amended complaint (Reference Complaint) was finally filed in the U.S. District Court for the Southern District of Ohio on January 15, 2004. However, in February 24, 2004, the case was reopened in the Southern District of New York as a Multi District litigation (1:04-MD-1584), and on April 1, 2004, the defendant, Freddie Mac, filed a Motion to Dismiss the amended complaint with prejudice pursuant to F.R.C.P. 12(b)(6). As of July 15, 2005, further proceedings has not yet been disclosed or taken.

The original complaint alleges that defendants violated federal securities laws by issuing a series of materially false and misleading statements to the market throughout the Class Period which statements had the effect of artificially inflating the market price of the Company's securities.

More specifically, the complaint alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market between April 18, 2000 and June 6, 2003, thereby artificially inflating the price of Freddie Mac securities. During the Class Period, the Company issued statements that failed to disclose and/or misrepresented the following adverse facts, among others: (1) that the Company failed to properly classify hedges and assets with respectto derivative securities; (2) that the Company used 'cookie jar' accounting wherein Freddie Mac deferred gains to subsequent quarters in a bid to keep its revenue and earning growth steady; (3) that the Company provided investigators with altered and misleading documents in order to conceal the Company's improper accounting; (4) that the Company lacked adequate internal controls and was therefore unable to ascertain the true financial condition of the Company; and (5) that as aresult, the value of the Company's net income and financial results were materially misstated at all relevant times.

On June 9, 2003, the Company announced sweeping changes in its management team. These changes arose out of the Company January 22, 2003 announcement that it would have to restate its financial results for fiscal years 2000, 2001, and 2002. Market reaction to the news was swift. Shares of Freddie Mac fell $9.61 per share or 16 percent to close at $50.26 per share, wiping out $7 billion in market value.

INDUSTRY CLASSIFICATION:
SIC Code: 6111
Sector: Financial
Industry: Consumer Financial Services

COMPANY/ISSUER NAME:	Federal Home Loan Mortgage Corporation (Freddie Mac)
COMPANY/ISSUER TICKER:	FRE
COMPANY WEBSITE:	http://www.freddiemac.com

FIRST IDENTIFIED COMPLAINT IN THE DATABASE

Frank, et al. v. Federal Home Loan Mortgage Corporation, et al.

COURT: S.D. New York	DOCKET NUMBER: 03-CV-4170
JUDGE NAME: Hon. John E. Sprizzo
DATE FILED: 06/09/2003	SOURCE: Business Wires
CLASS PERIOD START: 01/27/2003	CLASS PERIOD END: 06/09/2003
TYPE OF COMPLAINT: Complaint (Unamended and Unconsolidated)
PLAINTIFF FIRMS NAMED IN COMPLAINT:
Abbey Gardy, LLP (New York) 212 East 39th Street, New York, NY, 10016 (voice) 212.889.3700, (fax) , info@abbeygardy.com Alfred G. Yates, Jr. 429 Forbes Avenue, Pittsburgh , PA, 15219 (voice) 412.391.5164, (fax) , Brian Felgoise 230 South Broad Street, Suite 404 , Philadelphia, PA, 19102 (voice) 215.735.6810, (fax) 215/735.5185., Cauley Geller Bowman Coates & Rudman, LLP (New York) 200 Broadhollow, Suite 406, Melville, NY, 11747 (voice) 631.367.7100, (fax) 631.367.1173, Chitwood & Harley LLP 1230 Peachtree Street, N.E., 2300 Promenade II, Atlanta, GA, 30309 (voice) 888.873.3999, (fax) 404.873.4476, info@chitwoodlaw.com Faruqi & Faruqi LLP (New York) (former) 320 East 39th Street, New York, NY, 10016 (voice) 212.983.9330, (fax) 212.983.9331, Nfaruqi@faruqilaw.com Law Offices of Charles J. Piven, P.A. World Trade Center-Baltimore,401 East Pratt Suite 2525, Baltimore, MD, 21202 (voice) 410.332.0030, (fax) , pivenlaw@erols.com Milberg Weiss Bershad Hynes & Lerach LLP (New York, NY) One Pennsylvania Plaza, New York, NY, 10119-1065 (voice) 212.594.5300, (fax) , Schiffrin & Barroway LLP 3 Bala Plaza E, Bala Cynwyd, PA, 19004 (voice) 610.667.7706, (fax) 610.667.7056, info@sbclasslaw.com Spector Roseman & Kodroff (San Diego) 1818 Market Street, Suite 2500, Philadelphia, PA, 19103 (voice) 215.496.0300, (fax) 215.496.6611, Weinstein, Kitchenoff, Scarlato & Goldman 1608 Walnut Street, Suite 1400, Philadelphia, PA, 19103 (voice) 215.545.7200, (fax) 215.545.6535, info@wksg.com _____________________________________________ TOTAL NUMBER OF PLAINTIFF FIRMS: 11

DOCUMENTS FOR THE FIRST IDENTIFIED COMPLAINT
Class Action Complaint for Violation of Federal Securities Laws
Type: Complaint		Date on the document: 06/09/2003
U.S. District Court Civil Docket
Type: Docket		Date on the document: 05/19/2006

REFERENCE COMPLAINT

Ohio Public Employees Retirement System, et al. v. Federal Home Loan Mortgage Corporation, et al.

COURT: S.D. New York	DOCKET NUMBER: 03-CV-4261
JUDGE NAME: Hon. John E. Sprizzo
DATE FILED: 10/08/2004	SOURCE: Business Wires
CLASS PERIOD START: 04/18/2000	CLASS PERIOD END: 06/09/2003
TYPE OF COMPLAINT: First Amended
PLAINTIFF FIRMS NAMED IN COMPLAINT:
Barrett & Weber 105 East 4th Street, Cincinnati, OH, 45202 (voice) 513.721.2120, (fax) 513.721.2120, info@barrettweber.com Bernstein Litowitz Berger & Grossmann LLP (New York, NY) 1285 Avenue of the Americas, 33rd Floor, New York, NY, 10019 (voice) 212.554.1400, (fax) 212.554.1444, blbg@blbglaw.com Waite Schneider Bayless & Chesley Co. LPA (Cincinnati) 1513 4th St, Vine Tower, Cincinnati, OH, 45202 (voice) 513.621.0267, (fax) 513.381.2375, jcummins@bcblaw.com _____________________________________________ TOTAL NUMBER OF PLAINTIFF FIRMS: 3

DOCUMENTS FOR THE REFERENCE COMPLAINT
Notice
Type: Notice		Date on the document: 05/23/2006
Proof of Claim and Release
Type: Other		Date on the document: 05/23/2006
Stipulation of Settlement of Securities Action
Type: Settlement		Date on the document: 05/23/2006
U.S. District Court Civil Docket (03-CV-4261)
Type: Docket		Date on the document: 11/02/2006
U.S. District Court Civil Docket (04-MD-01584)
Type: Docket		Date on the document: 03/12/2007
[Proposed] Order Approving Charitable Donation Of Remaining De Minimis Settlement Fund
Type: Other		Date on the document: 05/31/2011
U.S. District Court Civil Docket (03-CV-4261)
Type: Docket		Date on the document: 05/31/2011

OTHER DOCUMENTS
Class Action Complaint For Violations Of Federal Securities Laws
Case Name and/or Number: Phillips, et al. v. Federal Home Loan Mortgage Corporation (Freddie Mac), et al.
Type: Complaint		Date on the document: 06/09/2003
Class Action Complaint For Violations Of Federal Securities Laws
Case Name and/or Number: Singleton, et al. v. Federal Home Loan Mortgage Corporation (Freddie Mac), et al.
Type: Complaint		Date on the document: 06/10/2003
Class Action Complaint For Violations Of Federal Securities Laws
Case Name and/or Number: Murphy, et al. v. Federal Home Loan Mortgage Corporation (Freddie Mac), et al.
Type: Complaint		Date on the document: 06/12/2003
Class Action Complaint For Violations Of Federal Securities Laws
Case Name and/or Number: Wasserman, et al. v. Federal Home Loan Mortgage Corporation (Freddie Mac), et al.
Type: Complaint		Date on the document: 06/12/2003
Class Action Complaint For Violations Of Federal Securities Laws
Case Name and/or Number: Koot, et al. v. Federal Home Loan Mortgage Corporation (Freddie Mac), et al.
Type: Complaint		Date on the document: 06/13/2003
U.S. District Court Civil Docket
Case Name and/or Number: In re Federal Home Loan Mortgage Corporation Securities Litigation
Type: Docket		Date on the document: 10/3/2003
Amended Class Action Complaint For Violations Of The Federal Securities Laws
Case Name and/or Number: Ohio Public Employees Retirement System And State Teachers Retirement System Of Ohio
Type: Complaint		Date on the document: 01/15/2004
U.S. District Court Civil Docket
Case Name and/or Number: Ohio Public Employ, et al v. Freddie Mac fna Federal Home Loan Mo, et al
Type: Docket		Date on the document: 03/11/2004
U.S. District Court Civil Docket
Case Name and/or Number: Ohio Public Employees Retirement System v. Federal Home Loan Mortgage
Type: Docket		Date on the document: 04/01/2004

WARNING AND DISCLAIMER OF LIABILITY:
The information included on this Web site, whether provided by personnel employed by Stanford Law School or by third parties, is provided for research and teaching purposes only. Neither Stanford University, Stanford Law School, nor any of their employees, agents, contractors, or affiliates warrant the accuracy or completeness of the information or analyses displayed herein, and we caution all readers that inclusion of any information on this site does not constitute an endorsement of the truthfulness or accuracy of that information. In particular, this Web site contains complaints and other documents filed in federal and state courts, which make allegations that may or may not be accurate. No reader should, on the basis of information contained in or referenced by this Web site, assume that any of these allegations are truthful.

Go to Search page | Go to Case Index page | Back to Top

�