Industry News

Freddie Mac may face SEC action

Co. receives notice from commission staff
Published on Aug 19, 2004

Freddie Mac announced late Wednesday that it might be the subject of a civil lawsuit by the Securities and Exchange Commission. The McClean, Va., company said it had received that information in a Wells Notice from SEC staff. The notice advises that SEC staff is considering recommending that the full commission seek a civil suit for possible violations of federal securities laws. The Wells Notice also indicates the SEC staff may seek a permanent injunction and civil money penalty against the company. "As previously disclosed, Freddie Mac has been cooperating with the SEC's investigation and will continue to do so as we evaluate the manner in which we will respond to the receipt of the Wells Notice," the company said in a statement. Freddie Mac got into trouble last year with regulators because of a series of accounting missteps over the previous three years. A restatement of the company's financials last year revealed that total earnings were understated by $5 billion. The account...

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