Another Lawsuit Settlement For Freddie Mac

Embattled mortgage giant Freddie Mac agreed this week to pay $4.65 million to settle a class-action lawsuit related to both its employee 401(k) plan and its ongoing accounting scandal, a move the company said also brings to an end a separate, ongoing investigation by the Labor Department.

The lawsuit alleged the government-backed mortgage loan company violated the Employee Retirement Income Security Act. Regulators say the individuals in charge of its Thrift/401(k) savings plan failed to provide complete and accurate information to participants in the program. In addition, the company then failed to manage the fund properly.

Freddie Mac did not admit wrongdoing in the settlement. It said the payment will be covered by insurance, but still requires court approval.

The company continues to rebuild itself an accounting scandal that amounted to nearly $5 billion. Unearthed in 2003, the debacle led to the departure of many top executives at Freddie Mac, which continues to be a major Florida mortgage buyer on the secondary market.

In December 2003, Freddie was fined $125 million by its top regulator, the Office of Federal Housing Enterprise Oversight (OFHEO) This April, Freddie Mac agreed to settle an investigation by the Federal Election Commission for a record $3.8 million. Also in April, it agreed to settle a shareholder class action suit for $410 million. The company has an investigation pending by the Securities and Exchange Commission (SEC).