Industry News

SEC investigates Fannie Mae

Federal probe of mortgage company now 'formal'
Published on Oct 20, 2004

The Securities and Exchange Commission has launched a formal investigation of troubled mortgage giant Fannie Mae, the company stated in an SEC form it filed Tuesday. Fannie Mae previously announced the SEC was conducting an informal inquiry. The company said it would continue to fully cooperate with the SEC's ongoing investigation. The investigation was spurred by controversies surrounding Fannie Mae's accounting that became public last month after its federal regulator issued a scathing 211-page report that outlined misapplications of Generally Accepted Accounting Principles, or GAAP for short. The report found that the company had used improper "cookie jar" reserve accounting – setting aside large cash reserves to reduce revenues in some years so they could be used in other years when the company needed them. The report, released by the Office of Federal Housing and Enterprise Oversight, also alleges that in 1998, the company willfully violated generally accepted accounting ...

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