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 accounting scandal led to a number of top management firings, resignations and a $125 million penalty.

Freddie Mac is a stockholder-owned corporation chartered by Congress.

Freddie Mac shares were trading on the NYSE at $66.83 Thursday morning, down about $0.72.

***

Send tips or a Letter to the Editor to samantha@inman.com or call (510) 658-9252, ext. 140.

Show Comments Hide Comments

Comments

Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
Success!
Thank you for subscribing to Morning Headlines.
Back to top
×