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Freddie Mac reaches $50 million settlement with SEC

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Calling it another milestone in putting an accounting and management scandal behind it, mortgage repurchaser Freddie Mac said Thursday it had reached a $50 million settlement with government regulators over the company's restatement of three years of earnings. In the settlement with the Securities and Exchange Commission, Freddie Mac neither admitted nor denied allegations that the company violated federal securities law by deceiving investors about ups and downs in the company's earnings. The SEC's complaint charged that senior managers, in order to project a "Steady Freddie" corporate image of smooth growth in earnings, encouraged accounting practices that smoothed out volatility in net income reported for 2000, 2001 and 2002. In order to conceal earnings volatility, the SEC alleged, net income was understated by $1.1 billion in 2000 and $4.3 billion 2002, and understated by $989 million in 2001, the SEC alleged. In restating its earnings for the three years at the end of 2003, Fred...