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Federal Home Loan Mortgage Corporation Summary: According to a law firm press release, on November 21, 2007 a class action was commenced on behalf of purchasers of Federal Home Loan Mortgage Corporation common stock during the class period.
The complaint charges Freddie Mac and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Freddie Mac is a shareholder-owned company established by Congress in 1970 to support homeownership and rental housing.
The complaint alleges that during the Class Period, defendants made false and misleading statements concerning Freddie Mac’s business, its risk management and the procedures it put in place to protect the Company from problems in the mortgage industry. In fact, during the Class Period, Freddie Mac was not adequately implementing risk control measures. Moreover, the Company’s procedures for appraisals led to many inflated appraisals, increasing the risk of defaults. Ultimately, the Company reported billions of dollars in losses, has been mentioned in investigations by the New York Attorney General and announced it must raise new capital to meet regulatory requirements. On this news, Freddie Mac stock fell over $10 per share to close at $26.74 on November 20, 2007.
According to the complaint, during the Class Period, defendants concealed the following information, which caused their statements to be materially false and misleading: (a) defendants were not implementing sufficient risk management controls to protect the Company from acquiring billions of dollars worth of mortgages with poor underwriting standards, causing the Company to have an untenable amount of risky loans; (b) defendants were not implementing controls to ensure that appraisals were done appropriately and to prevent collusion between lenders and appraisers, increasing the risk of defaults; (c) the Company was not adequately reserving for uncollectible loans, causing its financial results to be misleading; and (d) the Company had billions of dollars of bad loans which it would eventually have to write off, causing losses and capital deficiencies.
A similar, purported class action complaint has also been filed in the U.S. District Court for the Northern District of Ohio.
INDUSTRY CLASSIFICATION:
SIC Code: 6111
Sector: Financial
Industry: Consumer Financial Services
| COMPANY/ISSUER NAME: | Federal Home Loan Mortgage Corporation |
| COMPANY/ISSUER TICKER: | FRE |
| COMPANY WEBSITE: | http://www.freddiemac.com |
| FIRST IDENTIFIED COMPLAINT IN THE DATABASE | |||||||||||||||||
| Scott Reimer, et al. v. Federal Home Mortgage Corproation, et al. | |||||||||||||||||
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| DOCUMENTS FOR THE FIRST IDENTIFIED COMPLAINT | |||
| Complaint For Violation Of The Federal Securities Laws | |||
| Type: Complaint | Date on the document: 11/21/2007 | ||
| OTHER DOCUMENTS | |||
| Case Name and/or Number: | |||
| Type: | Date on the document: | ||
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